AIB and Bank of Ireland suspend shareholder dividends

AIB, Bank of Ireland and KBC have all scrapped plans to pay shareholder dividends in line with recommendations from the European Central Bank (ECB).

The State’s largest domestic retail banks updated the stock market on Monday morning, with AIB adding that it had put in place arrangements to allow its annual general meeting proceed via a live conference call from its headquarters.

Bank of Ireland shed 6.97 per cent while AIB slipped 9.4 per cent on Monday.

On Friday, the ECB ordered euro-zone banks to freeze dividend payments and share buybacks this year in an escalation of its efforts to avoid coronavirus triggering a credit crunch in Europe.

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Bank of Ireland said it had withdrawn its intention to propose a dividend of 17.5c per share in respect of its performance last year.

“The group has entered 2020 maintaining a strong financial position and robust capital base,” Bank of Ireland said.

“The Covid-19 global pandemic is a complex and evolving situation, and is expected to have a material impact on the group’s financial performance in 2020,” it said, adding that its outlook included in its February 24th announcement should “no longer be considered current in these circumstances”.

AIB, meanwhile, said it too would no longer seek shareholder approval for the final dividend for 2019 of 8c per share declared earlier this month, noting that its capital ratios were “materially in excess of minimum regulatory requirements”.

Conference call

The bank also said its April 29th agm would take place via a conference call. "AIB is strongly capitalised and well positioned to support the Irish economy and our customers at this critical time," said chief executive Colin Hunt.

“As the health and safety of everyone is our top priority, we hope that shareholders will understand the constrained circumstances under which our agm must take place this year.

“It remains far too early to assess the impact of the pandemic but, given the material uncertainty that it generates, conserving capital resources is the correct measure at this time,” Davy analysts Diarmaid Sheridan and Stephen Lyons said of the measures outline by the two banks.

Goodbody analyst Eamonn Hughes said in a note to clients that AIB had been due to pay €219 million to shareholders with Bank of Ireland set to distribute €189 million.

Belgian banking group KBC, meanwhile, also cancelled its dividend and suspended its share buyback programme until October at least.

"As always we adopt a very cautionary and conservative stance, even if our solid capital and liquidity positions allow the group to weather extreme scenarios," KBC group chief executive Johan Thijs said.

KBC also said its agm this year would be organised “in a virtual way”.

Bank of Ireland, the State’s largest domestic bank by assets, said it would further update the market in its first-quarter trading statement, “at which point more information on the economic and financial impacts should be available”.