The big banks’ respite has proved short-lived as their shares drift lower again, with future dividend payouts under a cloud.
were expected to provide a boost to the banks’ margins, with higher interest charges quickly passed on to borrowers.But bank shares fell on Friday, giving up some gains from earlier in the week as investors worried that continuing competition to secure volumes in a shrinking market, as well as the cost of paying more interest to depositors, would weigh on bank earnings.
“The major banks have announced $18 billion of buybacks since the middle of last year. However, given a more uncertain operating outlook, we don’t expect any further buybacks to be announced this year.”Dividends per share are also forecast to remain well below pre-COVID levels for most of the banks. “[In other words] we don’t know how APRA will treat usage of capital buffers during a downturn, under the finalised Basel III rules which come into effect in 2023.”
“It’s really volumes that move the needle. These are mortgage banks, and they’ve become even more mortgage banks than what they were previously,” he said.Mr Binsted agreed the banks would “continue to struggle” despite recovering from the crunch experienced during the worst of the pandemic.
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