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Westpac to pay special dividend

Nicholas Grove  |  03 May 2013Text size  Decrease  Increase  |  

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Nicholas Grove is a Morningstar journalist.


Westpac Group (WBC) on Friday announced a 10 per cent year-on-year rise in cash earnings to $3.53 billion for the six months to 31 March 2013.

The bank also announced a fully franked half-year dividend of 86 cents a share, up 4 cents on the same half in the prior year.

Westpac also said it will pay a fully franked special dividend of 10 cents a share.

Westpac Group chief executive officer Gail Kelly said the momentum in Westpac's business enabled it to increase the fully franked interim dividend by 5 per cent compared to the previous corresponding period.

"Momentum continued to build over the period, with all our Australian businesses producing double-digit cash earnings growth compared to the same period last year," she said.

"Reflecting the confidence we have in our capital position, we are also paying a fully franked special dividend of 10 cents a share to our shareholders, who are mainly Australians holding shares directly or through their superannuation."

Morningstar head of financial services Asia Pacific, David Ellis, described the result as a "strong all-round performance".

"The strong result is hard to fault, exceeding both our $3.5-billion forecast and consensus of $3.4 billion. The earnings performance confirms our long-held argument the major banks can deliver attractive profit and dividend growth despite only moderate loan growth," he said.

"The impressive performance supports our positive outlook on Westpac and the major banks. We are increasingly confident in the medium-term outlook and will likely reassess earnings forecasts."

Ellis said the highlight of the result was the special dividend, which was announced earlier than he had expected.

"We were expecting a special dividend or share buyback at the full-year results in November, so today's announcement was a pleasant surprise. The special dividend reflects a strong capital position and a lower-risk, highly profitable, retail-focused loan portfolio," he said.

"Moderate loan growth and increasing surplus capital provides us with confidence that attractive, fully franked dividends are sustainable.