Invest
Don’t dish out dividends right now, banks told
Banks and insurers are strongly being advised against handing out dividends to investors for “at least the next couple of months”.

Don’t dish out dividends right now, banks told
Banks and insurers are strongly being advised against handing out dividends to investors for “at least the next couple of months”.

The Australian Prudential Regulation Authority (APRA) has said it expects authorised deposit-taking institutions (ADIs) and insurers to limit discretionary capital distributions in the months ahead.
In a letter to relevant institutions, the corporate regulator said this is to ensure they instead use buffers and maintain capacity to continue to lend and underwrite insurance.
Taking into account the current uncertain outlook, and a need to preserve capacity to prioritise these “critical” activities, APRA said “this includes prudent reductions in dividends”.
Over the next few months, APRA said it expects ADIs and insurers to “seriously consider deferring decisions on the appropriate level of dividends until the outlook is clearer”.
Even where a Bard is confident they would be able to approve a dividend before this – where they have undertaken “robust stress testing” and discussed this with APRA – “this should nevertheless be at a materially reduced level”.
At the time of writing, Westpac was the first big four bank to acknowledge the letter.
It indicated that no decision has yet been made by the Westpac board in relation to the 1H20 dividend, with a decision to be announced alongside the bank’s 1H20 results on 4 May 2020.
Macquarie Bank has also made a statement.
It said it will work through the details of APRA’s recommendations as the bank’s board considers final FY20 dividend amounts.
Meanwhile, Bank of Queensland (BOQ) said it has determined “that it is prudent to defer the decision on payment of an interim dividend until the economic outlook is clearer and stress testing results have been discussed with APRA”.
Commenting on the bank’s decision, chairman Patrick Allaway said “BOQ understands the impact of this decision on shareholders, however also acknowledges this guidance as a prudent step for the industry”.
About the author

About the author


Shares
3 themes Aussie investors are chasing in 2021
Australian retail investors believe electric vehicles, the sharing economy and large pharmaceutical companies to be the major winners in 2021, their trade active has revealed. ...Read more

Shares
Could healthcare stocks continue to rally in 2021?
Despite being one of the big winners during the COVID-19 pandemic, global healthcare is predicted to continue to perform strongly over the longer term, an industry expert has said. ...Read more

Shares
Why you should give the gift of investing this Christmas
Investors are being urged to think long-term before deciding on a Christmas gift, with experts pointing to more impactful gifting ideas. ...Read more

Shares
Crown faces share buybacks over alleged money laundering
Crown Resorts might be forced to buy back shares from investors after a class action against the casino’s governance and risk management failings caused a massive share price plunge in October. ...Read more

Shares
Airbnb skyrockets to nearly US$100bn public market debut
Airbnb has more than doubled its share price in its first day of trading as the company recorded one of the largest first day rallies in history. ...Read more

Shares
How investors can beat the market through ETFs
Despite being known to track an index, investors are being advised that exchange-traded funds have evolved and can now beat the very markets they were initially created to track. ...Read more

Shares
How first-time investors can plan their portfolios into 2021
It is more important than ever for first-time investors to have a clear strategy for managing their portfolios as we enter 2021. ...Read more

Shares
Back in the black: Qantas predicts breaking even in 2021
The national airline expects to break even in 2021, minus the costs of redundancy payments, according to an official statement. ...Read more

Shares
3 themes Aussie investors are chasing in 2021
Australian retail investors believe electric vehicles, the sharing economy and large pharmaceutical companies to be the major winners in 2021, their trade active has revealed. ...Read more

Shares
Could healthcare stocks continue to rally in 2021?
Despite being one of the big winners during the COVID-19 pandemic, global healthcare is predicted to continue to perform strongly over the longer term, an industry expert has said. ...Read more

Shares
Why you should give the gift of investing this Christmas
Investors are being urged to think long-term before deciding on a Christmas gift, with experts pointing to more impactful gifting ideas. ...Read more

Shares
Crown faces share buybacks over alleged money laundering
Crown Resorts might be forced to buy back shares from investors after a class action against the casino’s governance and risk management failings caused a massive share price plunge in October. ...Read more

Shares
Airbnb skyrockets to nearly US$100bn public market debut
Airbnb has more than doubled its share price in its first day of trading as the company recorded one of the largest first day rallies in history. ...Read more

Shares
How investors can beat the market through ETFs
Despite being known to track an index, investors are being advised that exchange-traded funds have evolved and can now beat the very markets they were initially created to track. ...Read more

Shares
How first-time investors can plan their portfolios into 2021
It is more important than ever for first-time investors to have a clear strategy for managing their portfolios as we enter 2021. ...Read more

Shares
Back in the black: Qantas predicts breaking even in 2021
The national airline expects to break even in 2021, minus the costs of redundancy payments, according to an official statement. ...Read more