ANZ chief executive,Shayne Elliott,defended the dividend suspension as in the interests of shareholders.Credit:Nine
Amid a fierce debate about whether banks should be returning capital to shareholders during the pandemic,with pressure for big cuts from regulators,ANZ said it would update the market on any dividend in August. It came as profits tumbled 60 per cent to $1.4 billion in the March half.
Mr Elliott said in the"heat of the moment"when the outlook was so uncertain,the board was reluctant to pay out more than $1 billion of its capital as dividends. He said deferring the decision made more sense than trying to regain the capital later through a dilutive equity raising.
“The reason it’s in the interests of everybody,and all stakeholders,is the most important thing as a shareholder is that the bank remains viable,"Mr Elliott told journalists."There is no value in paying out a dividend today to find ourselves undercapitalised and under stress so that the shares are under even more pressure going forward."
Principal at fund manager Alphinity,Andrew Martin,said ANZ's board had shown an abundance of caution,though he could see why it reached its decision given the pressure on ANZ's capital. “To defer it entirely is quite a big deal,and you wonder whether or not they should have just paid a small number,” Mr Martin said.
Analysts were uncertain if ANZ would pay an interim dividend this year,and the bank indicated it would depend on how the economic situation evolved. If ANZ does not pay an interim dividend,it would be the first zero dividend since records on its website,which go back to 1979.
ANZ shares closed 1.4 per cent higher at $16.90,a smaller rise than rivals.
Mr Elliott said these were"probably the most extraordinary times in a generation,"adding the lender was preparing for a"fairly grim outlook"and it was prepared to dip into capital buffers.