Analysts say banks may declare higher dividends and share buybacks over the next fortnight’s earnings season as margin pressures ease.
in dividends and share buybacks over the next two weeks amid easing profit pressures reflected in what is expected to be a resilient earnings season, beginning with National Australia Bank on Thursday.
Banks have experienced a massive surge in their share prices over the past six months, to the extent that valuations have “If you look at through COVID and the material rate rises we have seen, arrears have been modest, and a decent chunk lower than we expected,” he said. Jarden analyst and chief economist Carlos Cacho found further deterioration in loan arrears and stress in certain industries, but the overall credit, employment and housing backdrop remained supportive.Despite sluggish credit growth, lower-than-expected bad debts had boosted excess capital at the banks, and analysts think this could be handed back to investors in a fresh round of share buybacks and dividends.
Morgan Stanley analyst Richard Wiles tipped Westpac to opt for a special dividend to draw down its franking credit balance, even if investors dismissed it as just a short-term “sugar hit”.
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