Bendigo Bank has joined the Bank of Queensland in withdrawing its financial outlook for the six months to June 30 due to the “uncertainty” created by the coronavirus pandemic.
The bank told the ASX yesterday that it was unable to make a reasonable assessment of the impact of the virus on its credit provisions, but pointed to its strong capital position and liquidity.
“Our commitment has always been to support our customers and their communities through both the good times and tougher times,” CEO Marnie Baker said. “We are open for business and as an essential service, it is vital we provide our customers with the dedicated and necessary support they need.”
In an update on operations, Bendigo said its branch network will remain open while all corporate staff work from home. Customers will also be able to defer loan repayments for up to six months and access a number of rate cuts, fee waivers and discounted interest rates.
“From a funding and liquidity perspective, the Bank is also well positioned. The Bank’s retail funding strategy and profile is supported by a high level of customer deposits which are complemented by prudent exposure sourced from wholesale funding markets. The Bank continues to manage its Liquidity Coverage Ratio and Net Stable Funding Ratio well in excess of the regulatory minimum requirements,” the bank said in yesterday’s statement.
“As Australia’s fifth biggest retail bank and one of Australia’s most trusted brands, Bendigo and Adelaide Bank is in a very strong position to support customers, staff and communities throughout this pandemic and beyond,” Ms. Baker said.
The Bank of Queensland was the first to withdraw its guidance – it reported a 10% slide in first-half profit and deferred a decision on its interim dividend after the regulator, APRA requested all financial groups consider such a move.
Bendigo doesn’t have to make a decision on its dividend until August when it is due to report its full 2019-20 results.
Bendigo shares fell more than 4% to $5.90.
Meanwhile, Macquarie analysts are the latest to go all gloomy about bank dividend levels and capital, forecasting lower payouts and new capital raisings by early 2020 for at least three of the big four.
In a note, on Thursday the Macquarie mob said Westpac, National Australia Bank, and ANZ Bank could raise up to $4 billion each in equity over the next 18 months by issuing new stock under dividend reinvestment plans or through capital raisings (They have done both before, during and after the GFC for instance).
The Macquarie analysts estimated loan losses will peak at about $4.5 billion a bank in the 2020-21 financial year.
They are tipping the lenders will still pay dividends, given their large base of retail shareholders, but raise capital at the same time by selling new shares under their dividend reinvestment plans (DRPs).
Capital raisings are also “likely.” They say CBA, which reports its earnings in August and has a stronger capital position than rivals, is the exception (Many analysts were tipping a capital return from the CBA before the COVID-19 pandemic swept over the economy).
“Except for CBA, we expect the majors to raise around $3-4 billion each using DRPs over the next 18 months. We also believe it’s likely that banks would look to address the capital strain proactively via a capital raising,” the analysts say.
The shares of the big four banks came under new pressures yesterday, especially after the weak figures for their big US counterparts like JPMorgan, Citi, Wells Fargo and Bank of America (Morgan Stanley reports Thursday).
All the big four banks fell yesterday, led by Westpac which down 2.3% to $15.92. CBA shares lost 1.3% to $61.26, ANZ shares dipped 1.6% to $16.58 and nAB shares dropped 2.1% to $16.28.
