Australian banks this week rewarded shareholders with a round of bumper dividends, 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 its profits with investors, Westpac unleashed a special dividend of 10¢ a share on Friday, on top of its move to raise the interim dividend by 5 per cent to 86¢.
The high payout 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 by 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 that 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.
But banking chiefs say conditions are tough as the industry grapples with deep-seated changes.
ANZ chief Gail Kelly said the banks were operating in a "challenging" environment,with consumers cautious, business confidence lacklustre and lending growth subdued.