Commonwealth Bank is tipped to unveil a final dividend of just below $2 a share when it reports its annual profits this week, and some are predicting a one-off return of capital via a special dividend.
On Wednesday the country's biggest bank will release its profits figures for the year to June. It is forecast to report full-year cash earnings of $7.6 billion.
As investors seek high-yield stocks, much of the interest is likely to be in the size of the final dividend and whether the bank follows Westpac's move in May to return capital via a special distribution to shareholders.
In February the bank said its final dividend for the second half would probably be "slightly lower" than the $1.97 it paid last year, because of a change towards paying out more in the interim dividend.
Analysts say it may also sweeten the deal by paying a special dividend, as slow credit growth has been causing it to build up capital.
Citi analysts have pencilled in a 10¢ special dividend, while Deutsche Bank said such a one-off payment was "not out of the question".
Banks tend to build up surplus capital in times of weak credit growth because there is less need to set aside the funds against new lending. Despite the cash rate falling to a record low, housing credit growth is growing at half the pace of several years ago, with many households remaining debt-shy.
Pengana Capital senior portfolio manager Rhett Kessler said banks could pay out special dividends if credit growth remained weak.
Of the big four, he said, Commonwealth Bank had the highest return on equity and the best record for provisioning, and this could allow the bank to pay a special dividend.
"Their ability to pay a special dividend would be the best of the big four," he said.
Despite forecasts for unemployment to rise, Mr Kessler said the sharp reduction in interest rates was likely to shield the bank's earnings from the weaker economic conditions.
"I think they've been buttressed by much lower interest rates," he said.
Westpac paid a 10¢ special dividend in May, while financial conglomerate Suncorp last month said it would also make a one-off payment to shareholders.