DNB ASA (DNB) will seek to get back to paying a 50 percent dividend as quickly as possible after it halved its payout to comply with stricter capital standards, the bank’s chief financial officer said.
“The payout should be around 50 percent in a long-term perspective, so we hope we back to that level as soon as possible,” Bjoern Erik Naess said today in an interview. “For the time being we need to balance the interest of the regulator and the trend is obvious. Banks need to strengthen their capital adequacy. So for the time being we allocate more of the net profit than we would normally like to do.”
The second-largest Nordic lender today announced it cut its payout to shareholders to increase capital ahead of tighter capital adequacy standards and avoid a deleveraging of its loan book. The bank will pay a 2 kroner dividend for 2011, down from 4 kroner for 2010, after reporting net income fell 12 percent to 13 billion. The payout out for last year will equal about 25 percent, down from 46 percent in 2010. Bloomberg forecasts show that the dividend won’t return to 4 kroner a share until 2015.
European banks will be required to meet tougher regulatory standards on the amount of core tier 1 capital on their balance sheets in order to reassure investors that they will be able to withstand the debt crisis. The European Banking Authority told banks in December to raise the money from investors, retained earnings and lower bonuses.
DNB wants to maintain “sufficient capital to continue to grow and to provide credit in the market,” Naess said. “Many European banks in the past are not able to do that. Instead they need to deleverage the balance sheet. We don’t want to come into that situation.”
DNB reported an equity Tier 1 capital ratio of 9.4 percent at the end of 2011.
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