Record spoils are shared with investors
Australian banks have rewarded shareholders with a round of bumper dividends this week, suggesting the financial sector is dodging the gloom gripping other parts of the economy.
Hot on the heels of ANZ's surprise move to share a bigger slice of profits with investors, Westpac unleashed a special dividend of 10¢ a share on Friday, on top of its move to raise the interim dividend 5 per cent to 86¢.
The pay-out came as the nation's second-biggest bank notched up a 10 per cent jump in first-half cash earnings to a record $3.525 billion, smashing forecasts of $3.41 billion.
Macquarie Group also raised its final dividend 66 per cent to $1.25, as a recovery in market activity and cost-cutting drove a 17 per cent lift in full-year earnings, to $851 million.
While demand for credit is weak, Westpac reported its profit margins from lending had widened by two basis points - a likely reflection of its decision not to pass on last year's interest rate cuts in full.
The higher dividends and strong profits pushed bank share prices to record highs before a sell-off late on Friday. However, bank chief executives maintain conditions are tough.
Westpac's Gail Kelly said there were "a number of breaks" in the economy, with consumers cautious, business confidence lacklustre and lending growth subdued. "Ask any one of my management team and they'll tell you it feels pretty tough in the business every single day in the slow-growth arena," Mrs Kelly said.
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