The Bank of Queensland cut its final dividend from 38 cents to 26 cents a share, a drop of 30%, and became another in the long line of local companies to either make a cut, or continue them.
Its banking peers have either reduced their final (the CBA) or warned of a reduction forthcoming with their September 30 results.
B of Q had earlier cut its interim payout so that the final for the year to June was 52 cents, down from 78 cents, a fall of a third.
It’s a distinguishing factor of the credit crunch and slowdown, which may not have hurt the economy as much as it has in the US, Japan, Europe or the UK.
But it has certainly put the finances of corporates large and small under real pressure and seen a majority of those groups take an axe to shareholder rewards.
(But from annual reports, it seems that many boards have been much slower to cut their own benefits. many have not done anything).
Some industrials such as Qantas and Fairfax media cut first and then eliminated payouts completely with the final payment being omitted.
These two companies were in industries hit by the downturn here and overseas, or hurt also by the internet and other technology changes.
Others such as property group, Westfield, have played it conservatively, cutting or reducing its projected payout ratio.
Most property groups have omitted dividends or reduced them in isolated cases, to a minimum to keep faith with investors.
Retailers like JB Hi-Fi and Woolworths have kept up payments or increased them because their earnings were not affected by the slowdown, and indeed grew.
Given the numerous reports of dividend cuts or omissions, it seems as though Australian companies have been on a mass campaign to reduce payments to shareholders.
But its been part of a systemic recapitalisation of Australian business, via the Australian stockmarket and superannuation system.
Yesterday a paper published in the latest Reserve Bank Bulletin confirmed that impression.
"During 2009 to date, nearly 60 per cent of ASX 200 corporates have announced cuts in dividends, often for the purpose of conserving cash to pay down debt," The RBA reported yesterday.
This has happened in conjunction with capital; raisings (the RBA says around $64 billion this year, while ASX figures say that in the 15 months since July 2008 to September 30 this year, secondary issues have raised around $114 billion).
The RBA analysis and comments is a comprehensive examination of the recapitalisation of corporate Australia via the stock market.
The central bank says that so efficient has been this process, that corporates have cut their need for loan funds from the banks.
"This has contributed to the recent decline in business credit – intermediated borrowing by listed and unlisted businesses – of around 7 per cent in annualised terms over the past six months, the RBA researchers said.
The cut in dividends "has been particularly true for more highly geared corporates such as real estate and infrastructure companies, for which aggregate distributions paid to shareholders declined by around 20 per cent in the 2008/09 financial year, to $7 billion, with around 85 per cent of these companies cutting dividends," according to the research.
"While real estate companies were traditionally considered to be a defensive investment that paid stable dividends, many have needed to change their dividend policy recently.
"In the past, some real estate companies borrowed against rising commercial property values partially to fund the payment of dividends in excess of cash profits.
"This underpinned their high payout ratio – around 90 per cent of profits compared with a little over 50 per cent for other listed corporates.
"Reduced borrowing capacity and profitability have led to these companies scaling back their dividend payout ratios, or in some cases paying no dividend as they move to a more conservative capital structure.
"Some real estate companies have also sought to retain cash by introducing dividend reinvestment plans.
"Other corporates reduced dividend payments by around 15 per cent.
"While resource companies increased dividends over the 2008/09 financial year, this was driven by a pick-up in distributions in the December 2008 half, underpinned by quite large cash balances and good profitability.
"Around 40 per cent of resource companies scaled back dividends in the June half 2009, with aggregate dividends declining by around 15 per cent compared with the previous corresponding half year, the first decline since 2000.
"The dividend payout ratio increased as companies sought to minimise dividend reductions despite lower cash profits."
The RBA said that with corporates continuing to raise equity funding, but net debt funding declining sharply, the composition of their external funding shifted away from debt toward equity.
"This occurred in two distinct phases.
"First, in 2008, corporates reduced their reliance on debt noticeably, with listed corporates’ new borrowings declining to less than $1 billion, from around $100 billion in 2007.
"The slowdown in borrowing was broad-based among sectors, though during this stage only resource companies actually reduced their debt levels (by $13 billion), mostly using funds generated internally.
"The second phase of corpora
