APRA restricts bank capital

APRA restricts bank capital

By Chay Flack (Equities Dealer, CMC Markets Stockbroking)

The US market has fallen 61.59 points overnight after the fed announced a continued stimulus program, signalling weaker growth in the US economy with a continuation of high unemployment.

This week has focus on the Australian banks with ANZ announcing a record $6.5billion profit Tuesday and a final dividend of 91 cents. It seems the market is still undecided on their result as they have maintained a 40 cent trading range from their high of$34.06.

This morning NAB have announced a profit of 5.94billion, up 9.3% on last year with a final dividend of 97 cents equating to a 5.24% dividend yield for the year on last night’s closing price.

Investors anticipating strong results from the banks and the prospect of increased or special dividends will be disappointed to know that the big four and Macquarie have been sent a letter from APRA (the banks prudential regulation authority) to limit dividend payouts due to expected increased capital requirements. Essentially banks will be required to hold more capital, which could be up to an extra $15billion.

It’s likely that we will see positive momentum in the banks in the lead up to ex-dividends however the restriction on capital flows by APRA will limit their growth and be an ongoing concern for investors.
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