SINGAPORE (Apr 17): The Covid-19 pandemic has changed many aspects of our lives. Since banks are central to the way we live — the way in which banks are perceived have also changed. Take as an example dividends. Local investors have over the past 10 years been able to look forward to rising dividends from our local banks. Now, banks’ ability to pay dividends will be seen as a sign that regulators are comfortable with their capital levels and their ability to pay these dividends. Such banks will be the best banks to invest in.

“With the outlook for bank sector earnings uncertain and dividends likely to be increas-ingly rare, we think banks that maintain div-idends will trade at premiums,” says Morgan Stanley in a report dated April 14. “This is partly because income funds will need these dividends but also because continued payment of dividends will be seen as a sign of regulatory comfort with capital levels,” the US investment bank confirms. Around 16% of Asia-Pacific dividends came from financial in 2019. The local banks have been one of the best dividend paymasters in recent years.

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