Dividend policy

The high capital ratios at the end of 2019 would allow the payment of dividend, were it not for the additional K1 and K2 criteria for banks with FX mortgage loan portfolios, which KNF maintained when it announced in December 2019 its recommendation on banks’ dividend policy. The K1 criterion is based on the share of FX mortgages in the total portfolio and the K2 criterion is based on the share of 2007-2008 vintages in the total FX mortgage portfolio.

Notwithstanding the above and taking into account the takeover of, and later merger with, Euro Bank conducted in 2019 (without a share issue) the Bank intends to retain the entire net profit for the year 2019 in its own funds in order to strengthen the capital ratios. Hence, the Bank’s Management Board will submit to the General Meeting of Shareholders an appropriate proposal to retain the entire net profit for the year 2019.

If the proposal to retain the entire net profit for 2019 is accepted by the General Meeting of Shareholders, the positive impact on the T1 and TCR ratio will be approximately 0.4-0.5 pp (to levels of 17.4% and 20.6% for Group, respectively). It should be reminded that capital rations as at the end of 2019 already incorporated the 1^st half 2019 net profit, according to the positive decision of KNF upon the Bank’s request.