No dividends for BOV shareholders, bank looking to preserve capital

BOV chairman says the bank is capital-hungry as the board of directors opts against paying dividends for 2022

BOV will not issue dividends for a fourth year in a row, and will set up new guidelines to govern dividend pay-outs in coming years.

When presenting its financial results on Thursday, the bank’s chairman Gordon Cordina confirmed that the bank will not issue dividends with an aim to optimise long-term value for shareholders.

“This decision was taken in the belief and studied opinion of the board of directors to ensure a return to stable dividends,” he said. 

BOV will instead adopt a dividend policy that will govern future decisions to issue dividends to shareholders.

Instead, the bank will evaluate ongoing profitability, compliance with all relevant regulatory requirements and expectations and optimising the productivity of capital in the bank.

“This bank is capital hungry. It has a plan to continue growing, expanding credit, invest in key sectors in the economy and treasury activity. All this requires capital. And we all know how expensive capital is.”

Among the considerations to declare dividends is “fair and reasonable expectations of shareholders for market-competitive and stable dividend pay-outs”.

This is the fourth time in five years that the bank’s board of directors has decided against paying dividends to shareholders.

It had paused dividend pay-outs for the 2018-2020 financial years, but paid a dividend of 0.0264 for the 2021 financial year.
Financial results

The bank reported a before-tax profit of €48.7 million for 2022. But excluding the effect of the Deiulemar settlement, the adjusted profit before tax stood at €151.7 million. 

Pre-tax return on equity was 4.3% and earnings per share €5.3 cents. Excluding the impact of Deiulemar, the return on equity was 13.3%.