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ANNUAL REPORT 2013

Management Discussion And Analysis

5.0. Dividend Policy

Since 1996, it has been the policy of the Board of Directors of the Bank to recommend the distribution to holders of common shares of a dividend payment of at least 30% of after-tax profits in each year, subject to the approval of the Bank’s shareholders and to the availability of distributable net income for the year.

As per the Bank’s by-laws and applicable Lebanese law, the annual net profits shall be distributed in the following order of priority:
  • To legal reserve, in amounts equivalent to 10% of the net profits after tax that will be transferred each year until such reserve reaches one-third of the Bank’s share capital. The legal reserve is distributable only upon the liquidation of the Bank;
  • To payment of Series “E”, “F”, “G” and “H” preferred shares dividends as approved by the Ordinary General Meeting;
  • To general or special reserves and/or to profits to be carried forward; as per Banque du Liban’s Decision 7129, the Bank is required to set aside a minimum of 0.2% and a maximum of 0.3% of its risks-weighted assets as a reserve for unspecified banking risks, which forms an integral part of the Bank’s Tier one capital. The aggregate of this reserve should be equivalent to 1.25% of risk-weighted assets within 10 years from Decision 7129’s issuance and 2.0% of risk-weighted assets within 20 years. In addition, the Bank is required to establish a special reserve for properties acquired in satisfaction of debts and not liquidated within the required delays, and the balance;
  • To holders of common shares.

The common dividends distributions are made annually on the dates specified by the General Assembly. Under Lebanese law, dividends not claimed within five years of the date of payment become barred by statute of limitations; half of these unclaimed dividends revert to the Bank, while the balance is paid over to the Lebanese government.

During its meeting held on April 14, 2014, the Ordinary General Assembly resolved the payment of dividends on preferred shares of respectively USD 6, USD 6, USD 4 and 4.5 respectively per Series “E”, “F”,”G” and “H” preferred shares and a common dividend per share of LBP 603 (before the 5% withholding tax) (USD 0.4). Total dividends paid for the exercise represented 54.4% of net earnings in 2013. On the basis of a share price of listed shares and GDRs of respectively USD 6.40 and USD 6.40 as at March 18, 2013, the dividend yield reached 6.3% for both listed shares GDRs.

The table below highlights the dividends distribution practices at Bank Audi for the 2008 exercise till that of 2013.

CONSOLIDATED PAYOUT RATIO1 (USD THOUSANDS)
1 Adjusted to the 10:1 stock split approved by the Extraordinary General assembly held on 02/03/2010, and the Central Bank of Lebanon on 21/04/2010, and in effect since 24/05/2010.