Jamie Smyth in Sydney
ANZ Bank suspended its dividend and reported a 51 per cent fall in interim profit to A$1.55bn ($1bn) on Thursday as the coronavirus crisis caused a rise in credit impairment charges.
The bank said it would incur credit impairment charges of A$1.67bn for the six months to the end of March, of which A$1bn were provisions related to the impact of Covid-19. ANZ wrote down the value of its Asian associates by A$815m, largely due to the damage wrought by the virus in those markets.
ANZ said 14 per cent of mortgage holders with A$36bn in loans had so far requested assistance under a scheme that provides up to six months' suspension on repayments.
David Gonski, ANZ chairman, said the bank would defer a decision on the 2020 interim dividend until there was greater clarity regarding the economic impact of Covid-19.
“This decision is not about our current financial position and ANZ has not received any concerns from APRA [Australia's banking supervisor] 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 the present economic uncertainty and that making a decision at this time would not have been appropriate.”
ANZ paid an interim dividend of 80 cents per share in the same period last year.
Australia’s prudential regulator this month asked lenders to limit payouts and preserve capital to support their customers during the downturn but left the final decision to the banks. However, this week National Australia Bank paid a dividend of 30 cents per share, even as it raised fresh capital, arguing that many shareholders relied on dividends for income.
ANZ capital buffers were lower than analysts had expected with a common tier one equity ratio of 10.8 per cent, sitting just above the “unquestionably strong” benchmark set by regulators.
UBS said the market would probably focus on the weaker than expected capital numbers.
“Dividend deferral appears prudent until there is more certainty on the outlook for the economy and asset quality,” said Jonathan Mott, UBS analyst.
Source : https://www.ft.com/content/f869440e-f0e4-39b3-8200-c4a1b585a6d0375