DBP seeks dividend relief extension

State-run Development Bank of the Philippines (DBP) will continue seeking dividend relief from the government for the next five to seven years as it works to rebuild its capital base following a hefty contribution to the Maharlika Investment Fund (MIF).

In an interview with reporters, DBP president and CEO Michael de Jesus said the bank has not been remitting dividends to the government in recent years. It plans to continue doing so to recover from the P25-billion contribution to the MIF in 2023.

Dividend relief allows DBP to retain earnings that are normally remitted to the national government.

“Our goal is to build up our capital. Right now, our equity is about P97 billion. When I joined three years ago, that was only about P80 billion,” De Jesus said. “So we need to build up as a bank. That’s why we’re asking for dividend relief, especially so we can recover.”

De Jesus also noted that DBP’s subsidiary, DBP-Leasing Corp., has remitted P111 million in dividends to the government this year. But he emphasized that the subsidiary is managed independently from DBP.

In addition to dividend relief, DBP continues to receive regulatory relief from the Bangko Sentral ng Pilipinas (BSP), which has eased certain capital requirements.

De Jesus said the bank would seek another year of regulatory relief. But the bank expects to phase out the temporary support within the next two years as its capital position strengthens.

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Earlier this year, he also said the bank would still meet all minimum capital requirements and that the relief extension was just to give the bank some elbow room.

“We get regulatory relief yearly. We received it this year, and we will get it again for 2025. Hopefully, maybe in two years, we may not need it,” he said.

The BSP said in February it was open to extending DBP’s regulatory relief, but noted that the bank would need to provide “a very strong” justification for such a request.