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ANZ suspends dividend as earnings fall
Jamie Smyth in Sydney
ANZ Bank suspended its dividend and reported a 51 percent drop in provisional earnings to A $ 1.55 billion ($ 1 billion) on Thursday, as the coronavirus crisis led to an increase in credit impairment charges .
The bank said it would incur credit impairment charges of A $ 1.67 billion during the six months through the end of March, of which A $ 1 billion related to provisions related to the Covid-19 impact. ANZ recorded the value of its Asian partners at A $ 815 million, largely due to the damage caused by the virus in those markets.
ANZ said 14 percent of mortgage holders with A $ 36 billion loans so far had applied for assistance under a scheme that provides up to six months of suspension on repayments.
David Gonski, president of ANZ, said the bank would defer a decision on the 2020 interim dividend until there was more clarity on the economic impact of Covid-19.
“This decision is not about our current financial position and ANZ has not received any concerns from APRA regarding our level of capital,” he said.
“The Board agrees with the regulator’s guidance that deferring a decision on the 2020 interim dividend is prudent given current economic uncertainty and that making a decision at this time would not have been appropriate.”
ANZ paid an interim dividend of 80 cents a share in the same period last year.
Australia’s prudential regulator this month asked lenders to limit payments and conserve capital to support clients during the recession, but left the final decision to banks. However, this week National Australia Bank paid a dividend of 30 cents a share, even when it raised fresh capital, arguing that many shareholders relied on dividends for income.
ANZ’s capital buffers were lower than analysts expected with a 10.8% common first-tier capital ratio, hovering just above the “unquestionably strong” benchmark set by regulators.
UBS said the market will likely focus on weaker than expected equity numbers.
“The dividend deferral seems prudent until there is more certainty about the outlook for the economy and asset quality,” said Jonathan Mott, analyst at UBS.
