The Bank of Queensland Ltd (ASX: BOQ) is expected to deliver the biggest dividend yield among the ASX 200 bank shares in FY24.
That's according to data from Commsec on consensus estimates for FY24 dividends among bank shares.
Bank of Queensland is expected to deliver a 52-cent dividend for FY24, which equates to a 7.5% yield.
In FY22, the regional bank paid 44 cents per share, fully franked. This was a 9% bump on FY21.
Here are the consensus estimates for the other ASX 200 bank shares.
| ANZ 200 bank share | FY24 forecast dividend | FY24 forecast dividend yield |
| Bank of Queensland Ltd (ASX: BOQ) | 52 cents | 7.5% |
| ANZ Group Holdings Ltd (ASX: ANZ) | $1.60 | 6.6% |
| Westpac Banking Corp (ASX: WBC) | $1.473 | 6.3% |
| Bendigo and Adelaide Bank Ltd (ASX: BEN) | 60 cents | 6% |
| National Australia Bank Ltd (ASX: NAB) | $1.77 | 5.7% |
| Virgin Money UK CDI (ASX: VUK) | $1.79 | 5.2% |
| Commonwealth Bank of Australia (ASX: CBA) | $4.55 | 4.3% |
| AMP Ltd (ASX: AMP) | 5.2 cents | 3.9% |
| Macquarie Group Ltd (ASX: MQG) | $6.775 | 3.8% |
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What will drive dividends in 2023 for ASX 200 bank shares?
Rising interest rates are leading to improved net interest margins (NIMs) for the ASX 200 bank shares.
This is a big factor in a bank's profitability, so there is an obvious impact on dividends because they are funded by profits.
A bank's NIM represents the difference between the income it receives from interest on home and business loans and the interest it pays out on deposits or savings accounts.
In October, the Bank of Queensland was among the first of the ASX 200 banks to report an improved NIM in its full-year FY22 results.
The market had been waiting to find out whether consecutive official cash rate rises since May had flowed through to the banks' bottom lines positively or negatively. Positively in terms of improved NIMs, or negatively in terms of higher bad debts as mortgages became more expensive for homeowners.
It turned out to be positive, with Bank of Queensland reporting an exiting net interest margin for FY22 of 1.81%.
Broker Goldman Sachs noted that was well ahead of the 1.75% 2H FY22 average and above their forecast for FY23 of 1.78%.
Investors loved the news and pushed the Bank of Queensland share price 11.3% higher on the day of the release of the full-year results. The share prices of many ASX 200 bank shares rose in the following days.
Banks return to wholesale international markets for lending
One threat to expanding NIMs is that Australian banks now have to return to the overseas wholesale market to at least partly fund ongoing mortgage lending.
This follows the closure of the Term Funding Facility (TFF), which was set up by the Reserve Bank in 2022. The TFF allowed Australian lenders to borrow at exceptionally low rates to keep mortgage lending going through the COVID-19 crisis.
However, the banks now have to pay that money back and return to wholesale markets for funds. The TFF was closed for drawdowns on 30 June 2021, and the last possible maturity date is 30 June 2024.
Wholesale funding is more expensive than using money from savings accounts, so the banks are starting to raise term deposit rates to attract more local fixed-term savings to use for lending.
As most Australian savers know, the banks were quick to pass on rate hikes to home loan customers but slow to pass them on to savings account holders. This helped protect NIMs in the second half of 2022.
Now, it is becoming cheaper to offer higher term deposit rates to attract local money for lending.
