UBS, Credit Suisse to delay half of dividend payments amid virus

[NEW YORK] Switzerland's two biggest banks proposed pushing back dividend payments as the spreading coronavirus roils markets and upends businesses.

Credit Suisse Group said on Thursday its board proposes to pay half of its 2019 dividend and intends to distribute the rest in the fall of this year. UBS Group, meanwhile, has proposed shareholders approve the bank's previously announced dividend of US$0.73 for the 2019 financial year be paid in two instalments, according to an emailed statement.

The Swiss financial markets regulator Finma has been increasing pressure on the nation's banks to reconsider their dividend proposals, saying that any payments to shareholders will be deducted from capital relief they've recently been granted. Switzerland last month adjusted regulatory standards to free up 26 billion Swiss francs (S$38.16 billion) of capital, its latest bid to ensure banks continue lending to businesses and households hit by the pandemic.

UBS also said it expects to report first-quarter earnings of around US$1.5 billion, adding capital and leverage ratios are in line with previous targets that are "well above regulatory requirements". That beats the average analyst estimate of US$1.17 billion, according to preliminary estimates compiled by Bloomberg. It's about 36 per cent higher than a year earlier.

"The first quarter of 2020 once again showed our business model's ability to perform well under a variety of market conditions," group chief executive officer Sergio Ermotti said in the statement. "We have been supporting our clients with lending and advice, helping them to navigate in this very difficult environment."

Mr Ermotti stopped short of scrapping the dividend last month, but has now succumbed to some of that influence from regulators. Credit Suisse also last month froze its plan to buy back as much as 1.5 billion francs of shares this year due to economic uncertainty caused by Covid-19.

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UBS has already provided 2.1 billion Swiss francs in liquidity to over 16,000 mostly small and medium-sized companies since the launch of the Swiss government-backed lending programme last month, it said in Thursday's statement. The group has also committed to donate US$30 million towards virus aid projects.

BLOOMBERG