UPDATE 3-South African lenders rally as central bank clarifies dividend guidance

  • Reuters
  • Stock Market News
UPDATE 3-South African lenders rally as central bank clarifies dividend guidance
Credit: © Reuters.

(Recasts, adds Absa comment, details, price moves)

JOHANNESBURG, April 7 (Reuters) - South African bank stocks recovered to make gains on Tuesday after the central bank signalled that its advice not to pay dividends did not include 2019's and that the National Treasury was considering a scheme to encourage lending. South African Reserve Bank's Prudential (LON: PRU ) Authority advised banks not to pay dividends or bonuses this year on Monday, joining the Bank of England, European Central Bank and others in asking them to skip shareholder returns. Johannesburg Stock Exchange's banking index .JBANK , which fell 4.3% at the market open, was 9.3% higher at 1445 GMT, outperforming a 2.77% rise across the country's bourse.

Standard Bank SBKJ.J , Absa ABGJ.J and Investec INLJ.J INVP.L , three of South Africa's biggest lenders, said they were considering the SARB's guidance on the 2020 dividend and would update shareholders in due course.

Absa said it would pay the 2019 dividend announced at its full-year results in March.

Kuben Naidoo, head of the Prudential Authority, told Reuters that because companies in South Africa have a legal obligation to pay dividends they have already declared, that the SARB expects dividends to be distributed where that is the case.

Standard Bank and Absa, as well as Nedbank NEDJ.J and FirstRand FSRJ.J all declared dividends when they reported their annual or interim results in March.

Investec and Capitec (JO: CPIJ ) CIPJ.J have yet to report their annual results.

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