Australia's 'Big Four' banks see shares fall after regulator urges dividend deferral

Credit: REUTERS/Reuters Staff

Shares of the "Big Four" Australian lenders fell on Wednesday, a day after the prudential regulator asked banks and insurers to consider deferring dividend payouts or use buffers until there was more clarity on any impact from the coronavirus pandemic.

Adds lenders' comments, details of regulator's request; changes media packaging information

April 8 (Reuters) - Shares of the "Big Four" Australian lenders fell on Wednesday, a day after the prudential regulator asked banks and insurers to consider deferring dividend payouts or use buffers until there was more clarity on any impact from the coronavirus pandemic.

Commonwealth Bank of Australia CBA.AX, Westpac Banking Corp WBC.AX, National Australia Bank Ltd NAB.AX, and Australia and New Zealand Banking Group Ltd ANZ.AX fell by 4.1% to as much as 6.2%, with Westpac falling the most.

The Australian Prudential Regulation Authority (APRA) asked banks and insurers to limit discretionary capital distribution so that they have sufficient capacity to continue essential functions such as lending and underwriting insurance.

The regulator said dividends will need to be at a "materially reduced level" even when a board is confident it can approve a dividend before conducting stress tests that will need to be discussed with APRA.

In response to the regulator's statement, Westpac said it is yet to make a decision regarding its interim dividend, while National Australia Bank said it will take APRA guidance into account when considering its dividend for the first half year.

Australian brokerage Morgans expects the top lenders will suspend the next dividend, saying commentary may describe the move as a deferral until the outlook is clearer. Analysts earlier forecast that the Big Four may cut dividend in coming weeks due to the pandemic.

Separately on Wednesday, the regulator suspended issuing new banking, insurance and superannuation licences for a least six months because of uncertainty created by the virus outbreak.

Australian regulator urges banks, insurers to defer dividends amid virus outbreak

Australian banks brace for dividend cuts amid virus woes -analysts

(Reporting by Shreya Mariam Job in Bengaluru; Editing by Himani Sarkar and Christopher Cushing)

((ShreyaMariam.Job@thomsonreuters.com;))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Reuters

Reuters, the news and media division of Thomson Reuters, is the world’s largest international multimedia news provider reaching more than one billion people every day. Reuters provides trusted business, financial, national, and international news to professionals via Thomson Reuters desktops, the world's media organizations, and directly to consumers at Reuters.com and via Reuters TV.

Learn More