As forecast by ShareCafe earlier this week, the ANZ Bank (ANZ) has cut its final dividend payout to shareholders on top of its lowered interim payout as the impact of rising bad debts and the slow revamp of its operations and move away from Asian retail banking takes hold.
The bank slashed its final dividend to 80 cents a share from 95 cents a year ago, a chop of more than 15%.
And more big cuts are coming as the bank slashes its payout ratio target from the near 80% level of the 2015-16 year to a range of 60% to 65% for this year and beyond.
If revenues do not start growing soon (they fell in the latest year), along with profits, shareholders face another sharp of cut in income this year – possibly to a total for this year around $1.40 a share, against the $1.86 a share paid for 2014-15.
The ANZ this morning reported an 18% drop in full year cash profit to $5.9 billion, dragged down by the cost of the revamp and move out of Asian retail banking and a process which now includes a possible sale of its Australian wealth management business.
Analysts had expected between $6.2 billion and $6.4 billion in cash profit, so it is a big miss.
Statutory profit after tax for the year to September was $5.7 billion, down 24%, while revenues eased 3% to $20.53 billion.
The result includes $1.077 billion of after tax charges, including restructuring and the cost of software. Some of these were revealed in market updates last Friday and on Monday, when the possible sale of some of its Australian wealth business was flagged for the first time.
The final fully franked dividend of 80 cents a share gives a full year amount of 160 cents, an overall drop of 12%. The bank paid a final of 95 cents a share in 2014-15 and an 80 cents a share interim earlier this year (previously 86 cents a share).
The NAB last week maintained its dividend.
The full year payout ratio is close to 80% of cash profit but that won’t last long. The bank says it is working toward a fully franked payout ratio of 60% to 65%. So more pain for shareholders.
On Monday the ANZ reported the sale of its retail banking and wealth management business (built up by former CEO, Mike Smith) in Singapore, Hong Kong, China, Taiwan and Indonesia to Singapore’s DBS Bank.
The bank also indicated its Australian wealth management business was under review, but said more would be made public with the results announcement.
This morning CEO, Shayne Elliott confirmed the possible sale of the life insurance, advice and superannuation and investments businesses in Australia.
“ANZ will pursue a disciplined approach to this process and will update the market as appropriate,” he says.
Elliott says the decision to look at selling the Australian wealth business reflects a focus on how the bank can best interact with customers rather than manufacturing products.
The wealth Australia division cash profit for the year was down 24% to $327 million.
The ANZ said gross impaired assets increased to $3.17 billion with new impaired assets up 3%.
The biggest new charge was $145 million to settle Oswal case in WA to end a $2.5 billion claim over the receivership and sale of Burrup Fertilisers.
Mr Elliott described the results “decent” in what he called a transitional year.
“The underlying business did well, we continue to grow market share, we continue to have more customers choose to bank with us,” he said.
