Westpac Bank to Sell A$2.5 Billion Shares; Slashes Dividend
(Bloomberg) -- Westpac Banking Corp. will raise about A$2.5 billion ($1.7 billion) in a share sale and slashed its dividend as profit slumped.
- Cash profit fell 15% to A$6.85 billion in the year ended Sept. 30, the Sydney-based lender said Monday.
- The bank is raising capital to meet new regulatory standards, and give it the flexibility to deal with potential litigation or regulatory action, it said.
- The dividend was slashed to 80 cents a share from 94 cents last year, further evidence the era of bumper returns from the big-four banks is over. While the decision to cut the dividend “wasn’t easy” it was necessary to bring the payout ratio to a more sustainable level, the bank said.
- Return-on-equity, a key measure of profitability, slumped 225 basis points to 10.75%, well below its target of about 13%-14%.
- “2019 has been a disappointing year,” Chief Executive Officer Brian Hartzer said. “Financial results are down significantly in a challenging, low-growth, low interest rate environment.”
- Westpac’s earnings were also hit by the bill for cleaning up from past misconduct, which cost A$1.1 billion in the last year alone. The lender is also waiting on the outcome of an investigation by the country’s financial-crimes agency over potential breaches of money laundering rules.
- For more details on Westpac’s results, click here
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