ANZ Bank kicks off the 2019-20 bank reporting season on Thursday but the NAB snuck on in Friday with a pre-release update of its own with news of another $600 million-plus of losses and impairments, including wage underpayments to staff.
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Buried in the Reserve Bank’s latest Financial Stability Review is the best news the country (and the governments) have had since the COVID-19 pandemic started ravaging the economy in February – Australia’s banks are healthy and have more than enough capital to support the economy during the slowdown without getting into trouble.
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Unlike its larger rival, Westpac, the ANZ Bank revealed that it will pay shareholders an interim dividend – 25 cents a share – reversing the deferral decision taken several months ago at the height of the initial surge in COVID-19 infections and lockdowns.
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The dividend outlook for banks has weighed heavily on valuations since the onset of the pandemic and the resultant economic slump. Has the prudential regulator, APRA, set minds at rest?
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APRA has eased restrictions around paying dividends in time for the June 30 and September 30 reporting season but told the banks and insurers they should seek “to retain at least half their earnings” when considering payouts.
Read MoreThe chances of banks resuming paying dividends have risen sharply after the key regulator, the Australian Prudential Regulation Authority (APRA) indicated a change of mind.
Read MoreMorgans does not believe, at this stage, the bad debt damage inflicted on the banks by the virus will be as bad as the GFC, largely due to the extent of monetary/fiscal support.
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Global ratings group has found a silver lining in the recession and lockdowns generated by the COVID-19 pandemic – it has made the Australian financial system and the banks, safer.
Read MoreANZ Bank has sold UDC Finance in New Zealand to Shinsei Bank for NZ$762m. Morgan Stanley considers the sale of a non-core business and the capital release as an incremental positive.
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ANZ Bank’s asset sales are reaching the end of a three-year campaign with the news that the bank is finally is selling its New Zealand asset finance business, UDC Finance, for $NZ762 million ($A705 million).
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As the outlook for earnings has significantly deteriorated and companies conservatively manage balance sheets, the outlook for dividends has been materially impacted. Since the middle of February, over 30% of companies in the ASX200 have deferred, cancelled, suspended, or revised dividends.
Read MoreBoth KPMG and Deloitte have examined the interim reports from the big four and see them better placed for the immediate future than it might seem from the results which all saw a surge in bad debt provisioning, loan impairments and provisions for compensation.
Read MoreThe ANZ Bank has deferred its interim dividend after reporting a sharp fall in half-year earnings and a surge in bad debt provisions as it prepares to confront the financial cost of the lockdowns associated with the fight to control COVID-19.
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Results from the ANZ Bank and Macquarie Group will dominate an otherwise quiet week. The big issue for investors will be the level of dividends both banks declare after the strong advice from the key regulator APRA.
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APRA, the financial regulator, has told banks, insurers, and other financial groups to think carefully about deciding whether dividends can be paid to shareholders over the rest of this year and into 2021.
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It’s getting harder for Australian financial regulators to avoid joining their peers in New Zealand, the UK and EU in ordering banks to suspend their dividends and other capital management moves such as share buybacks.
Read MoreBarclays, RBS, Lloyds, Standard Chartered, Santander and HSBC have all agreed to not proceed with dividends. Will Australian financial regulators follow their peers in the EU and UK and tell major banks to suspend dividends and planned buybacks?
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Analysts argue Australia’s banks are in a much better position to weather this storm than they were in 2008, and have been oversold on that basis.
Read MoreWith earnings already under pressure from ultra-low rates, the likelihood of further unconventional measures implies another step down. Macquarie notes that while the jury is out on the effectiveness of QE, consensus suggests it hurts bank profitability.
Read MoreBank shares took their second pounding of the week so far yesterday after Monday’s thumping and its clear investors were quite blinkered in their approach yesterday.
Read MoreThe RBA’s rate cut and bets that another will follow in the next month or so have seen questions again raised over the share prices and sustainability of bank dividends at their current levels.
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If you exclude the likes of Afterpay Touch, then the financial sector did not help the wider market in 2019.
Read MoreThe shares of Australia’s big four banks rose strongly yesterday after the Reserve Bank of New Zealand watered down its new capital requirements.
Read MoreA clever move by the ANZ Bank yesterday to differentiate itself from its three major rivals, all of whom are struggling with problems with AUSTRAC, the financial intelligence agency.
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Jamie Nicol, Portfolio Manager for DNR Capital’s Australian Equities High Conviction Fund and SMA, spoke with Informed Investor about the rotation from growth to value.
Read MoreKPMG’s Major Australian Banks Year-End Analysis Report 2018-19 finds that the four majors reported a combined cash profit after tax from continuing operations of $26.9 billion, down 7.8% on FY2018.
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ANZ’s move to partially frank its final dividend has sent ripples across the financial sector and triggered fears that Westpac on Monday and the NAB in a week’s time, will follow suit.
Read MoreThe ANZ bank is maintaining final dividend at 80 cents a share after a weak full-year profit.
Read MoreThe ANZ releases its full-year figures early Thursday morning and Macquarie releases it’s 2019-20 interim the next day, the continuing strength of the current rebound for the ASX 200 could very well depend on the results.
Read MoreANZ Bank has announced additional remediation charges of $559m. Unlike National Australia Bank’s ((NAB)) recent additional charges, this does not relate to financial advice but rather to product reviews and fee & interest calculations.
Read MoreLast week it was the National Australia Bank with a $1.1 billion surprise lift in its remediation costs for customers, yesterday it was Melbourne-based rival, ANZ with another $559 million of its own.
Read MoreIn its second and final stability review for 2019, the RBA has warned on a combination of factors that will depress bank earnings, starting with the continuing rise in customer remediation over abuses exposed by the Hayne Royal Commission.
Read MoreAhead of its September 30 balance date for its 2018-19 financial year ANZ Bank has completed the sale of its retail and small business banking operations in Papua New Guinea.
Read MoreThe chances of the banks paying higher dividends in the coming years look to have diminished after APRA ordered Westpac, NAB and ANZ to set a total of $1.5 billion in extra capital aside.
Read MoreWeaker bank shares helped take the wider market lower for another session, but the day’s loss was nowhere near as damaging as Monday’s 1.2% slump.
Read MoreThe RBA’s second 0.25% rate in two months had a predictable impact on bank share prices – down they went, taking the ASX 200 with them.
Read MoreRedemption? Sort of; but the way the share prices of Australian banks rebounded in the June half year was extremely helpful to super funds and self-managed funds and investors generally.
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Scott Kelly, Portfolio Manager for the DNR Capital Australian Equities Income SMA, gives Informed Investor his thoughts about which are the best income stocks on the ASX at the moment.
Read MoreANZ Bank’s New Zealand woes continue with it’s country head, David Hisco leaving the bank amid claims of expenses irregularities.
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ANZ and Westpac failed to pass on the full 0.25% cut from the Reserve Bank to its mortgage customers and immediately faced pressure from the central bank.
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