Singapore big three's total dividends to decline 3.1% in 2020

UOB is expected to suspend its special dividend for the fiscal year.

Total dividends from Singapore’s big three banks—DBS, UOB, and OCBC—are expected to decline by 3.1% to $5.4b, according to IHS Markit’s 2020 APAC dividends report.

These three stocks contribute 38.9% of total dividends in the Singapore market, and thus play a decisive role in the trajectory of the overall level of payments, the report noted.

The adverse impacts from COVID-19 have already taken a bite out of banks’ earnings, as reflected by their recently announced Q1 results.

UOB, for example, reported a 19% YoY decrease in net profit due to the surge in impairment charges resulting from COVID-19 fallout. Due to the bank’s downbeat earnings outlook, IHS Markit expects UOB to suspend its special dividend in 2020, which has been consistently $0.2 historically.

In contrast, DBS paid out a flat Q1 dividend despite a 29% YoY decline in net profit. Even so, the full picture of banks’ dividends payment going forward remains uncertain if the pandemic lingers, noted IHS Markit.

Overall, Singapore listed companies are expected to post $14.2b in dividends for 2020, a 4.5% YoY fall compared to the $14.8b recorded last year. This stems from the circuit breaker measures amidst the COVID-19 pandemic, which in turn is projected to trigger a shrinkage of the gross domestic product (GDP) by more than 4% this year.