The Supervisor of banks called on them to take a cautious approach to dividend distribution

The Supervisor of Banks at the Israel Bank called on banks to take a cautious and conservative approach to dividend distribution. The Supervisor of Banks clarified that in light of the growing trend of emerging from the Corona crisis and the strength of the banks in Israel, which allows them to support the economic activity of the economy, " And its future implications. "
The position of the Supervisor of Banks is that a distribution in an amount higher than 30% of the profits of 2020 is not considered careful and conservative capital planning. Together with the warning, we noted today in the Central Bank that the banking system in Israel is strong, and the banks enjoy excess capital and liquidity.
In general, the banks have overcome the corona crisis so far and are in capital ratios higher than the required minimum capital ratios, and it is expected that the banks will be able to continue to support the economic activity of the economy during the exit from the crisis.
"We are still in an environment of uncertainty regarding the continuation of the health crisis and the accompanying economic consequences, including for the banks," the Bank of Israel said in a statement.
Despite the growing trend of exit from the corona crisis, the level of uncertainty is still high and there is a risk that some of the effects of the crisis have not yet been manifested or have not materialized. The aforesaid uncertainty and risk necessitate continued careful and conservative capital planning. In addition, the Supervisor of Banks expects that the banks will continue to utilize their capital surpluses to increase credit and assist the Israeli economy in the process of emerging from the crisis. Banks are required to plan conservatively, carefully and meticulously.
Against this background, the Central Bank noted this morning that a board of directors considering a dividend distribution should take a careful and conservative approach and base a dividend decision on a forecast that addresses future effects of the corona crisis on the bank's exposures and capital.