Sat, Feb 11 2012

Bulgarian banks to capitalise profits instead of paying dividend

Mon, Mar 22 2010 10:08 CET

byDnevnik.bg

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Bulgarian banks to capitalise profits instead of paying dividend

Photo: Julia Lazarova

For a second year in a row, Bulgarian banks are expected to retain their 2009 profits and not pay dividends, according to bankers polled by Dnevnik.

Analysts said that the move would help banks better shield themselves against the economic storm.

A banker speaking on condition of anonymity said that Corporate Commercial Bank - which broke ranks by plans to hand out to shareholders a gross dividend of five leva a share, or 30 million leva in total - could be joined by one or two more market players.

He said that dividend payment is important for lenders as it gives their stock a bounce.

First Investment Bank (FIBank), which is also listed for trading on the Bulgarian Stock Exchange (BSE), said that it had not scheduled its general shareholders’ meeting yet and had not decided on a possible dividend payout.

DSK Bank plans to stick to its policy of withholding dividends ever since it was purchased from the government by Hungary’s OTP Bank.

Unionbank, whose shareholders are due to meet on March 30, also plans to retain its 2009 profit, with United Bulgarian Bank (UBB) and Postbank expected to follow suit.

Piraeus Bank Bulgaria said that it had retained its profits since it went to Greek ownership and plans to follow the same course this year.

ProCredit Bank’s general shareholders’ meeting will take place at the end of May. The bank said it would propose to shareholders to add the 2009 profit to reserves as it has done every other year.

Loan defaults in Bulgaria are projected to peak in mid-2010 but the growth pace will start to slacken after the second quarter.

At the end of January, bad loans totalled 4.471 billion leva, about 11.6 per cent of the total household and business loan portfolio of Bulgarian banks, excluding overdrafts.

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