All eyes are on the Monetary Authority of Singapore (MAS) to review the dividend cap on local banks, which has been in place for a year, says PhillipCapital Research analyst Terence Chua. If Chua is right, the MAS could ease the restriction, which has capped the banks’ total dividends per share at 60% of FY2019 levels.  

According to Chua, the MAS is running additional stress tests on the local banks to assess whether it is necessary to extend current dividend restrictions on them. It is in close discussions with the banks on their capital management plans and will be advising them on its position “very shortly”.

In a July 8 note, Chua is maintaining “overweight” on the banking sector here, while maintaining “accumulate” on both DBS Group Holdings (target price $31.40) and United Overseas Bank (target price $28.70). Chua is also maintaining “buy” on Oversea-China Banking Corp (OCBC) with a target price of $14.63.

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