The Financial Services Authority (OJK) is looking into regulating the dividend pay-out ratio provided by the banking industry to shareholders in order to optimize the industry's growth. Dian Ediana Rae, the Executive Director of Banking Supervision at OJK, mentioned that they won't specifically set a fixed percentage for the dividend pay-out ratio that banks can give to shareholders. However, OJK will establish rules concerning the obligation of banks to have a dividend distribution policy and communicate it to shareholders. This policy will consider both internal and external aspects in determining the dividend distribution, proportionally weighing the interests of the bank and the shareholders, and will outline the necessary mechanisms of approval and authority. Dian explained that regulating bank dividends is a common practice. In certain countries, for instance, regulators set limits on dividend ratios based on the bank's financial performance, such as capital, asset quality, or considering macroeconomic conditions, as a preventive measure to strengthen banks' resilience, as was done during the Covid-19 era. Dian added that investors are more interested in sustainable growth. If banks are not regulated and they distribute all their dividends, they might not invest in areas like IT, human resources, etc., which could affect their long-term growth.
Previously, the Chairman of OJK's Board of Commissioners, Mahendra Siregar, mentioned that large dividend ratios can limit banks' ability to invest in supporting digital transformation and innovation. Siregar noted that dividend pay-out ratios from various banks appeared to be too high, potentially constraining the ability of banks to invest in supporting essential digital transformation and innovation. It's known that several major banks have distributed substantial dividends for the 2022 fiscal year. For instance, Bank Rakyat Indonesia (BBRI) disbursed a cash dividend of IDR 43.5 trillion, equivalent to 85% of its total net profits for 2022. Similarly, Bank Central Asia (BBCA) issued a cash dividend of Rp 25.3 trillion, Bank Mandiri (BMRI) distributed a cash dividend of IDR 24.7 trillion (60% of the net profits), and Bank Negara Indonesia (BBNI) allocated a cash dividend of IDR 7.3 trillion (40% of the net profits) for the same year.
