NongHyup Financial Dividend Payout Ratio Set at 20%... Final Confirmation at General Meeting of Shareholders

[Asia Economy Reporter Kiho Sung] NongHyup Financial Group has set its payout ratio at 20%.

On the 26th, NongHyup Financial held a board meeting and confirmed the 'Approval of the 2020 Financial Statements and Business Report (Draft),' including the dividend plan, as an agenda item for the shareholders' meeting. The payout ratio resolved at this board meeting is 20%, and it is expected to be finalized through a resolution at the shareholders' meeting on the 31st.

Accordingly, there is growing speculation that NongHyup Financial may proceed with an interim dividend considering the operation of support projects for farming households. The dividends from NongHyup Financial are transferred 100% to the NongHyup Central Association. These dividends are then distributed to members through local NongHyup cooperatives. Since the dividends are used for projects that provide practical support to farmers, such as fertilizer and pesticide costs and warehouse support, a reduction in the payout ratio inevitably leads to a decrease in the amount of support for farmers. NongHyup Financial has reportedly continuously explained its special circumstances to financial authorities and requested exceptions, but these requests have not been accepted.

Last year, NongHyup Financial paid dividends of 500 billion KRW, which is 28.1% of its net profit, to the NongHyup Central Association. Considering that NongHyup Financial's net profit for the previous year was 1.7359 trillion KRW, reducing the payout ratio to 20% is expected to decrease the dividend amount to 350 billion KRW.

Some expect NongHyup Financial to proceed with an interim dividend after June, when the financial authorities' guidelines expire. In fact, the articles of incorporation of NongHyup Financial provide grounds for implementing an interim dividend. According to Article 54 of the NongHyup Financial articles of incorporation, "An interim dividend pursuant to Article 462-3 of the Commercial Act may be paid to shareholders on a specified date once during each business year by resolution of the board of directors."

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