Just nine days after calling banks to curb their dividend, the Monetary Authority of Singapore is urging finance companies to similarly cap their dividends this year to 60% of what they paid last year.
The finance companies are also encouraged to offer scrip in lieu of cash.
On July 27, Sing Investments and Finance reported 1HFY20 earnings of $3.9 million, down 22.2% y-o-y. No interim dividend was declared. For FY2019, it paid six cents, down from seven cents paid in FY2018.
On Aug 7, Singapura Finance reported earnings of $1.95 million, down 65.3% y-o-y. Similarly, no interim dividend was declared. For FY2019, it paid a total of 3.5 cents, down from four cents for FY2018.
Hong Leong Finance, part of the Kwek family’s group of businesses and the larges finance company here, paid a total of 15 cents for both FY2019 and FY2018.
On Aug 7, it declared an interim dividend of 3.5 cents for 1HFY20, down from five cents paid for the same period last year. Similar to its peers, Hong Leong Finance reported lower earnings for the first half, down 30.5% y-o-y to $36.5 million.
The three local banks, following MAS’ call, have all cut their dividends when they reported their 1HFY20 earnings this past week.
The bulk of finance companies’ loans are made to SMEs.
“Capital positions of the finance companies remain strong and the dividend restriction is a pre-emptive measure to bolster the finance companies’ ability to continue to support the credit needs of businesses and consumers in the current business environment,” said MAS on Aug 7.
“The dividend restriction for finance companies balances the objective of capital conservation to sustain lending with the interests of shareholders who may rely on this income,” added MAS.