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ANNUAL REPORT 2014

Management Discussion And Analysis

5.0. Dividend Policy

Since 1996, it has been the policy of the Bank’s Board of Directors to recommend the distribution to holders of common shares a dividend payment of at least 30% of the after-tax profits for each year, subject to the approval of the Bank’s shareholders and to the availability of distributable net income for the year, after payment of distributions to holders of preferred shares. Pursuant to the Bank’s by-laws and applicable Lebanese law, the Bank’s annual net profits (which are payable from the Bank’s standalone available-for-distribution net income) shall be distributed in the following order of priority:
  • To the legal reserve, in amounts equivalent to 10% of the Bank’s net profits after tax, to 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. In 2014, the Bank and its subsidiaries transferred LBP 55,250 million to the legal reserve in accordance with applicable law.
  • To the general banking risks reserve; pursuant to BDL’s Decision No. 7129, the Bank is required to set aside a minimum of 0.2% and a maximum of 0.3% of its risk-weighted assets as a reserve for unspecified banking risks, which forms an integral part of the Bank’s Tier I capital. The aggregate of this reserve must be equivalent to 1.25% of risk-weighted assets within ten years from the date of Decision No. 7129 and 2.0% of risk-weighted assets within 20 years of such date. 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.
  • To the payment of dividends in respect of the Series “E”, “F”, “G” and “H” preferred shares (or any other series of preferred shares), as approved by the Ordinary General Meeting of the Bank’s shareholders.
  • To the Bank’s general or special reserve or profits carried forward.
  • To holders of the Bank’s common shares.

The determination to pay any dividend in respect of the common shares, and the amounts thereof, will depend upon, among other things, the Bank’s earnings, its financial condition and cash requirements, priority rights for distribution, government regulations and policies, and other factors as may be deemed relevant by the Board of Directors and shareholders from time to time.

The common dividend distributions are made annually on the dates specified by the General Meeting. 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.

The table below highlights the dividends distribution practices at Bank Audi for the 2009 exercise till that of 2014.

During its meeting held on April 7, 2015, the Ordinary General Assembly resolved the payment of dividends on preferred shares of respectively USD 6, USD 6, USD 6 and 6.5 respectively per Series “E”, “F”,”G” and “H” preferred shares and a common dividend per share of LBP 603 (before the 5% withholding tax), the equivalent of USD 0.4. Total dividends paid for the exercise represented 54.3% of consolidated net earnings in 2014. On the basis of a share price of listed shares and GDRs of respectively USD 6.75 and USD 7.00 as at March 12, 2015, the dividend yield reached 5.9% for listed shares and 5.7% for GDRs.

Dividend Policy
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.