Of all the S&P/ASX 200 Index (ASX: XJO) blue-chip shares, the ASX banks have had probably the worst year of the lot so far in 2020.
3 of the 'big 4' ASX banks have seen their share prices crater in 2020 – going from historically normal prices to levels we haven't seen since at least the GFC, if not the 1990s.
Even Commonwealth Bank of Australia (ASX: CBA) has seen its market capitalisation cut by over a third since February. Back then (an eternity ago), Commonwealth Bank was competing neck-and-neck with CSL Limited (ASX: CSL) for the title of the ASX's biggest company.
Now, the contest is effectively over. CSL's current market cap is now close to $139 billion, while Commonwealth Bank is sitting at just under $107 billion.
But when you put things in perspective, Commonwealth is actually doing ok.
Westpac Banking Corp (ASX: WBC) has seen its size cut in half over the past year. It's a similar story with National Australia Bank Ltd (ASX: NAB) and Australia and New Zealand Banking Group Ltd (ASX: ANZ).
No more dividends from ASX bank shares?
Of course, a large driver of these share price crashes has been the realisation by the market that the big 4 banks are unlikely to fulfil the role that most investors expect from them in a portfolio in 2020 – providing a large source of dividend income and franking credits.
NAB has already come out with a 64% cut to its interim dividend for 2020. NAB investors are looking at receiving a 30 cents per share dividend in July. Last year, the same dividend came in at 83 cents (and the year before that – 99 cents).
ANZ shocked its investors this week when it declared its interim dividend 'deferred'.
And whilst we haven't yet heard from Westpac, I don't think anyone is expecting a different story there!
On current prices, NAB's new dividend (if annualised) would equate to a yield of 3.69% for new investors – which is one of the lowest starting yields NAB has offered in living memory. But for anyone who has bought NAB shares in a year that wasn't 2020, it's a far sadder story still.
So is this the 'new normal' for ASX banking shares? Dividend lords of the ASX no longer?
Well, unfortunately, I think the factors that are driving the banks' dividends lower will be here to stay for a while. In my opinion, we're a long way until credit growth starts growing again in the Australian economy, let alone interest rates coming off their zero baseline.
The banks might return to their former dividend glory one day, but I don't think that day is soon.
