ANZ Bank shares ended the day up 1.3% despite a mealy-mouthed assurance at yesterday’s AGM from new chair Paul O’Sullivan about the lender’s dividend policy.
The shares ended up 1.3% at $23.28 after the guarded assurance from the chairman will be guided by how the coronavirus crisis evolves, despite the bulk of its customers affected by the pandemic lockdowns restarting to make payments.
Mr. O’Sullivan told the meeting he was “acutely aware” of how important dividends are to shareholders and committed to reviewing the bank’s approach in 2021.
“Ultimately, our final decision as a board will be influenced by how the remainder of the crisis evolves, particularly from a macro-economic perspective, and our views on the longer-term sustainability of the dividend,” Mr. O’Sullivan, who replaced David Gonski in the role this year, said.
The cautious note from Mr. O’Sullivan came despite APRA scrapping its dividend cap on Tuesday, introduced in April at the height of the pandemic to preserve capital.
APRA said the decision resulted from a significant improvement in the economic outlook and the fact that the bank had survived a tough stress test run by APRA, the basis of which was a 15% plunge in GDP.
Mr. O’Sullivan told shareholders the bank was closely monitoring changing conditions and indicated the previous modelling may have been overly cautious. “our board will continue to keep an eye on the provisions, continue to estimate whether or not they are adequate, or indeed, whether they may have been over-provided for.”
The onset of COVID-19 in March forced the banks at APRA’s direction to look closely at all capital management issues such as dividends and act conservatively to protect liquidity.
The regulators and Federal government directed the banks to offer Australians (consumers and businesses) the ability to pause loan repayments for six months. The deferral period was subsequently extended by an additional four months
According to ANZ’s latest update on loan deferrals, 80% of paused customers had now started making repayments on loans that were paused in March.
The Bank’s remuneration report was easily passed with a 96% ‘yes’ vote, but there was some noisy questioning of the bank’s climate policy.
