Westpac will not pay dividends
Westpac’s board has decided it is “prudent” not to pay a first half 2020 dividend despite maintaining a “strong” balance sheet, according to an announcement on the Australian Securities Exchange (ASX).
The announcement said the decision to not pay dividends was “the desire to retain a strong balance sheet” and the ongoing uncertainty in the operating environment. The bank noted it would consider dividends as part of finalising its full year 2020 results.
Westpac said its statutory net profit for Q320 was $1.12 billion, and its cash earnings were $1.32 billion.
Its balance sheet for Q320 saw common equity tier one capital ratio unchanged at 10.8%, and growth in capital from the quarter’s earnings was largely offset by higher credit risk weighted assets.
Westpac chief executive, Peter King, said the bank had maintained a strong balance sheet and increased provisions for bad debts to support its approach to managing impairments.
“Our third quarter 2020 result excluding notables is higher than first half average, mostly due to lower impairment charges. Nevertheless, the impact of the COVID-19 pandemic is clear as activity fell and margins declined,” he said.
“Where there have been some signs that the economy is performing better than early expectations, significant uncertainty remains, particularly given the unpredictability of COVID-19 outbreaks and their local impacts.”
Earlier this year, the Australian Prudential Regulation Authority urged banks to 'maintain caution' around dividends in the turbulent market environment and said it expected them to retain at least half of their earnings.
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