BANK ZACHODNI WBK, the Polish unit of AIB, will be "less generous" with its 2008 dividend because the company needs capital to sustain lending and its expansion plans.
"We will be much more cautious with the dividend for this year than a year ago," chief executive Mateusz Morawiecki said in an interview in Warsaw yesterday.
"We will consider very low levels, perhaps even zero," he added.
The dividend from 2007 earnings was three zloty (€0.79) a share, half the year-earlier payout, and the bank will present the supervisory board with a 2008 dividend proposal in January, the chief executive said. AIB holds a 70.5 per cent stake in Zachodni.
The global financial crisis is hurting lenders in emerging markets, including Poland, as their borrowing costs rise amid an economic slowdown.
The country's lenders have been forced to increase prices for mortgages in foreign currencies, which accounted for about 80 per cent of new loans in September, and to bring in stricter requirements for potential borrowers.
Demand for mortgages at Zachodni dropped 30 per cent in the past three months, Mr Morawiecki said.
The bank plans to spend about 25 million zloty (€6.65 million) on opening new branches in the fourth quarter and about 30 million zloty next year, as it seeks to win new business.
It aims to have 530 branches in operation at the end of 2009.
Zachodni expects revenue from mutual funds to fall by 270 million zloty to 300 million zloty in 2008.
Declines on the Warsaw Stock Exchange cut assets under management to nine billion zloty from about 22 billion zloty at the beginning of the year.
"Even if assets stay at this level in 2009 and there are no more declines, it will have a negative effect on our earnings next year," Mr Morawiecki said. - (Bloomberg)
