Banking stocks stage small rebound after BoT cut off dividend payout limit

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Banking stocks rose slightly on Friday after the Bank of Thailand (BoT) lifted a limit on bank’s dividend payouts and phased out the cut in the Financial Institutions Development Fund (FIDF) fee rate from next year.

By midday, Kiatnakin Phatra Bank Plc (KKP) gained 1.6 per cent from its prior closing to 63 baht. 

Kasikornbank Plc (KBANK) rose 1 per cent to 152 baht, while Siam Commercial Bank Plc (SCB) saw a 0.96 per cent rise to 105 baht. 

As impact from the Covid-19 impact lessens and the economy starts to recover, the BoT said that broad-based relief measures to resist the uncertainty are less required.

The dividend payout rate of banks was formally limited to no more than 50 per cent of annual profit. 

The banks will have to pay a normal fee rate to the FIDF, which offers financial aid to troubled institutions, by 0.46 per cent of their deposits, after the cut to 0.23 per cent expires at the year-end.

The BoT had introduced several relief measures to assist those affected, including lowering the policy rate to a record low of 0.5 per cent, soft loans for small and medium-sized enterprises (SMEs), and debt forbearance.

Ratasak Piriyanont, an analyst at Krungsri Securities, said in a note that the central bank’s move to unwind relief measures came as no surprise to him. 

“The BoT’s decision is in line with our expectation and implies they will start monetary policy tightening soon.” 

“We maintain a Neutral rating for the banking sector,” Ratasak said, adding that rate hikes are expected later this year.

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