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.
