Australia’s Westpac scraps dividend as coronavirus crisis squeezes capital

10Views

August 18, 2020

SYDNEY Westpac Banking Corp scrapped its interim dividend on Tuesday, becoming the first major Australian bank to officially cancel a shareholder payout amid the coronavirus crisis, knocking its share price lower.

Australia’s banks have been grappling with record-low interest rates, higher default risk and loan holidays for struggling borrowers, as the country faces its first recession in nearly three decades.

With many investors relying on bank dividends for their retirement income, the pressure to maintain payouts is intense, but analysts flagged Westpac’s shrinking capital levels could lead it to cancel its final payout as well.

In a quarterly update on Tuesday, the country’s second largest lender said its core capital level had shrunk 1 basis point to 10.80% due to higher capital allocations to riskier exposures, a level close to the 10.50% baseline preferred by regulators.

Westpac said it booked A$826 million ($596 million) in credit impairment charges during the quarter, and increased provisions to cover for bad debts, as mortgage stress was emerging, customers were being downgraded and delinquencies were increasing.

“Westpac’s priority has been to remain strong so we can continue supporting customers through this challenging period,” Westpac’s CEO, Peter King said in a statement.

“While there have been some signs that the economy is performing better than early expectations, significant uncertainty remains.”

The bank reported third-quarter cash earnings of A$1.32 billion, above the first-half average as coronavirus-related impairment charges eased.

However, net interest margin, a highly watched measure of bank profitability measure, was 8 basis points below the first-half average, hurt by record low rates.

“While cancelling of the interim dividend was not a surprise the lower capital outcome will raise questions about a final dividend,” Credit Suisse analysts told investors in a note.

Westpac shares fell 3.5% in morning trade to A$16.97, in a slightly firmer broader market.

Westpac also said it had contacted 85% of the 135,000 customers receiving deferral plans, and around half of them were expected to resume regular payments.

Also Watch

NEET, JEE Exams To Be Held In September As SC Dismisses Plea For Postponement | CRUX

($1 = 1.3866 Australian dollars)

Disclaimer: This post has been auto-published from an agency feed without any modifications to the text and has not been reviewed by an editor

Array
(
[videos] => Array
(
[0] => Array
(
[id] => 5f3abfc97c39367400f8cdf2
[youtube_id] => S37xH3eZ3aU
Australia’s Westpac scraps dividend as coronavirus crisis squeezes capital => NEET, JEE Exams To Be Held In September As SC Dismisses Plea For Postponement | CRUX
)

[1] => Array
(
[id] => 5f3abb517c39367400f8cd50
[youtube_id] => zdaFWUGVDho
Australia’s Westpac scraps dividend as coronavirus crisis squeezes capital => Is A Second Wave Of COVID-19 Coming ? | Brass Tacks With Zakka Jacob | CNN News18
)

)

[query] => https://pubstack.nw18.com/pubsync/v1/api/videos/recommended?source=n18english&channels=5d95e6c378c2f2492e2148a2,5d95e6c278c2f2492e214884,5d96f74de3f5f312274ca307&categories=5d95e6d7340a9e4981b2e10a&publish_min=2020-08-15T07:20:06.000Z&publish_max=2020-08-18T07:20:06.000Z&sort_by=date-relevance&order_by=0&limit=2
)

Australia’s Westpac scraps dividend as coronavirus crisis squeezes capital

Also Watch

Speak Your Mind

LEAVE A REPLY Cancel reply

Get in Touch

Recommend for You

Oh hi there It’s nice to meet you.

Subscribe and receive our weekly newsletter packed with awesome articles that really matters to you!

You might also like

EDITOR PICKS

POPULAR POSTS

POPULAR CATEGORY

About Us

Follow Us

Support Us & Be a Patreon

Add QNewsHub to your Homescreen!

Oh hi there
It’s nice to meet you.