In a research report on Thursday, DBS analyst Lim Rui Wen said this implies a dividend payout ratio of 40-44 per cent based on FY20 forecast earnings.
Likewise, Citi said the latest development will be viewed as negative for the banks as their dividend yields are considered an important component of the investment thesis for owning these names. The cut in dividends will add to the pain of a sharp quarter-on-quarter fall in the trio's net interest margins for Q2, according to Citi's Mr Kong and Mr Sng.
As at Q1 2020, the Common Equity Tier 1 ratio stood at 13.9 per cent for DBS, 14.3 per cent for OCBC and 14.1 per cent for UOB, among the highest across Asean banks. DBS analyst Ms Lim estimates that the dividend cap will add 0.2-0.3 per cent to the research team's projected CET1 ratio as at the end of FY20.
"The short-term and prudent nature of this measure does not raise any question marks on the long-term sustainability of dividends," Mr Rawat wrote.