APRA Flags End To Clamp On Bank Dividends

Old favourites, bank shares returned to the fore on the ASX yesterday after the key regulator APRA revealed that its clamp-on dividends would be eased.

The ASX financial sector outperformed with a gain of 1.7% (the ASX 200 was up 0.5%) taking the sector to an eight-week high.

The surge by bank stocks helped the ASX 200 to the highest close in 9 months.

Australian Prudential Regulation Authority head, Wayne Byers told a Sydney finance conference that it was time to reconsider a cap on bank dividend payouts that currently prevents banks paying more than 50% of earnings to shareholders.

He said in his speech that the economic outlook had improved enough for the regulator to re-examine the cap on bank dividend payouts.

“We have deliberately never put in place guidance for a long period of time,” he said.

“Obviously we will be minded how the situation has evolved.

On the whole, I think the outlook has improved, bank capital has certainly increased, the economic situation looks more positive. I think it is time we look at the issue again.”

His comments saw bank shares rise strongly.

Shares in the Commonwealth Bank were up 2.9% to $77.55, the highest closing price since March 3. Westpac shares added 2.3% to $19.45, NAB shares added 2.1% to $22.29, and ANZ shares were up 1.3% at $22.01 at the close.

Glenn Dyer

About Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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