Westpac has joined rival ANZ in deciding to pay a reduced final dividend after reporting a sharp slide in full-year earnings.
Australia’s second-largest bank told the ASX early Monday that its final and only payout to shareholders for 2019-20 will be a full franked 31 cents a share.
(The ANZ paid a final of 35 cents after an interim in August of 25 cents).
Westpac paid a final of 80 cents a share last year for a total for 2018-19 of $1.74 a share. So the drop this year is a large 82 cents a share, meaning shareholders have paid a stiff price for the AUSTRAC problems in particular and the impact of COVID.
Westpac said full-year profit fell 66% to $2.29 billion after lifting bad debt provisions and the higher fine from AUSTRAC ($1.3 billion) over the money-laundering breaches (Westpac had provided $900 million earlier in the year). The fall was $4.494 billion.
Cash earnings – the favoured profit measure of banks, fell 62% to $2.608 billion for the 12 months against $6.85 billion the year before. Cash earnings excluding notable items totalled $5.227 billion compared with $7.89 billion the year before.
So-called ‘core’ earnings (before impairments) fell 25% to just over $7.9 billion.
Westpac said its impairment charges were $2.384 billion higher compared than in 2018-19 “mostly reflecting the deterioration in the economy as a result of the COVID-19 pandemic which has led to a significant increase in the expected credit losses.”
“Operating expenses increased $2,633 million or 26% compared to Full Year 2019. The rise was mainly due to costs associated with AUSTRAC proceedings including a provision for penalty; customer service costs associated with responding to COVID-19; asset impairments, and an increase in amortisation and impairment of capitalised software; partially offset by provisions for Wealth restructuring in Full Year 2019<“ Westpac said in commentary with the results.
