New Zealand's big four Australian owned banks paid combined annual dividends of $4.2 billion this year, after Reserve Bank imposed Covid-19 restrictions were lifted.
ANZ New Zealand, the country's biggest bank and a subsidiary of the ANZ Banking Group, led the way with September year dividends of $1.880 billion.
ASB, a subsidiary of Commonwealth Bank of Australia (CBA), paid out $975 million for its June financial year.
Westpac NZ, a subsidiary of the Westpac Banking Corporation, paid out $788 million for its September year. And BNZ, whose parent is National Australia Bank (NAB), paid dividends totaling $560 million.
As a percentage of their annual cash profit, ANZ NZ's dividend weighed in at 91%, ASB at 69%, Westpac NZ at 68% and BNZ at 40%.
Across their parent banks by comparison, the ANZ Banking Group's dividend was equivalent to 59% of cash profit, Westpac Banking Group's 83%, while CBA and NAB were both at 68%.
In April 2020, in the early days of the Covid-19 pandemic, the Reserve Bank announced all locally-incorporated banks were being restricted from paying dividends on ordinary shares until “the economic outlook has sufficiently recovered.” At the time Reserve Bank Governor Adrian said the move was designed to keep public money being spent by the government to support NZ businesses in NZ.
This restriction was eased at the end of March 2021 to allow banks to pay up to 50% of their earnings as dividends to their shareholders, with the Reserve Bank stating an intention to remove them entirely on July 1, 2022, "subject to no significant worsening in economic conditions." All bank dividend restrictions were indeed lifted on July 1.
The initial block and subsequent limit on bank dividends helped NZ banks' increase regulatory capital through retained earnings. This is against the backdrop of them needing to increase capital to meet heightened Reserve Bank capital requirements being phased in by 2028, with the deadline pushed out at the onset of the pandemic.
Pre-Covid, in 2019, the big four NZ banks paid combined annual dividends of $2.385 billion.
This year all four major banks posted record annual net profit after tax. Combined this came in at $6.231 billion. That's up $738 million, or 13%, year-on-year from $5.493 billion in 2021.
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