Investors and bankers said they are aware that any dividend payouts will depend heavily on how the rest of the year pans out following the deepest recession in centuries.
Industry chiefs are determined to avoid criticism for profiting from the pandemic and have not lobbied hard for a rapid dividend restart. Many top bankers still bear the scars from public fury during the financial crisis a decade ago.
However, Natwest chairman Sir Howard Davies earlier this month said the restriction should be removed so the industry once again becomes investable.
When Barclays, RBS, HSBC, Santander, Standard Chartered and Lloyds scrapped payouts in March, it was explained that the move was necessary to help banks support the economy through 2020. Cash bonuses for senior staff were also stopped.
Ian Gordon, a banks analyst at Investec, said he believes the freeze may be extended further.
He said: “All it means is that banks’ dividend-paying capability may become subject to further restrictions, so no good news, just the threat of a further unwelcome blunt instrument regulatory intrusion.”
Mr Pyle acknowledged that hopes for repayment could be derailed by a second wave, as well as surging unemployment when taxpayer life support schemes come to an end.
At this point, banks should know if they have set aside enough money to cover the cost of loans going bad.
He said: “That will determine whether or not banks provisioning levels have been sufficient. If they have been, then capital positions are strong enough to support a dividend with the regulator’s approval.
“The remaining question will then be at what level. Continued low interest rates and muted economic growth likely means earnings power of the banks is lower and the regulator is unlikely to allow them to pay divis out of capital, so it could take a while to get back to the level we had at the start of the year.”