Press Releases

23.01.21Press Statement

CBK Statement on Banks' Cash Dividend Distributions

The Central Bank of Kuwait (CBK) has taken numerous preventive measures to contain the impacts of the Covid-19 pandemic on the domestic economic and banking conditions, and to foster growth in banking credit and stimulate economic activity. Within its monetary policy framework, the CBK decided in March 2020 to cut its discount rate to a historically low level of 1.5%.

On the regulatory policy front, and in line with its well-defined and prudent procedures, which support an expansionary environment and are conducive to maintaining monetary stability and financial stability, the CBK announced on 2 April 2020 adjustments to its regulatory instructions in order to maximize the lending capacity of banks and empower their ability to perform their vital role and provide financing to various economic sectors. The revised instructions allowed banks to use the capital conservation buffer for the capital adequacy ratio.

In a statement, the CBK reaffirmed its previous statements that easing the regulatory requirements on the capital adequacy ratio front was stipulated under the instructions issued to all Kuwaiti banks on 24 June 2014 regarding the Implementation of Capital Adequacy Ratio (Basel III) and in conformity therewith, which allowed banks in exceptional circumstances subject to CBK’s approval, to temporarily use the capital conservation buffer, and the CBK may, in such cases, set restrictions including those relating to dividend distribution. All such procedures were in line with the relevant standards of Basel Committee on Banking Supervision.

The statement added that in light of data revealing the resilience of Kuwaiti banks in terms of their solvency, and showing banks did not utilize their capital conservation buffer in 2020, Kuwaiti banks may distribute cash dividends to their shareholders proportionate to the results and net profits for the mentioned year, provided that such distribution should not affect the required capital adequacy ratio. To this end, the CBK is currently reviewing the Kuwaiti banks’ financial statements for the financial year ended 31 December 2020 before approval thereof.

In conclusion, the statement affirmed the strength of the banking sector and its ability to overcome the crisis, and reiterated the Central Bank of Kuwait's continued commitment to reinforce monetary stability and financial stability in the State of Kuwait.

Prev Standard & Poor's affirmed State of Kuwait's Sovereign Credit Ratings at ‘AA-’; Outlook Negative
Go Back
Next CBK Launching Diraya Financial Awareness Campaign