Have you noticed a trend in the interim dividends from Australia's big four ASX 200 bank shares this year?
Two of the banks kept their interim dividends the same as last year.
Only two banks gave investors an increase, and they were arguably pretty small bumps.
Let's take a look.
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Dividends from ASX 200 bank shares for 1H FY25
Westpac Banking Corporation (ASX: WBC) shares will pay an interim dividend of 76 cents per share, with 100% franking, on 27 June.
That's the same as last year.
Australia and New Zealand Banking Group Ltd (ASX: ANZ) shares will pay 83 cents per share, with 70% franking, on 1 July.
Also the same as last year.
National Australia Bank Ltd (ASX: NAB) shares will pay 85 cents per share, with 100% franking, on 2 July.
That's a 1-cent per share increase or a 1.19% bump.
Commonwealth Bank of Australia (ASX: CBA) shares paid an interim dividend of $2.25 per share, with 100% franking, back in March.
That was a 10-cent bump or 4.65%.
Payouts 'looking very stretched': expert
Investors Mutual portfolio manager Daniel Moore offered this observation, as reported in The Weekend Australian:
The number one conclusion from results season is dividends are looking very stretched for all the banks except CBA.
… dividend sustainability is definitely being questioned.
Excess capital positions are deteriorating and their growth outlooks are very benign due to competition.
Canstar's data insights director Sally Tindall expects competition to "continue heating up" for new loans as interest rates come down.
She noted that many banks had already lowered their fixed rates in anticipation of the Reserve Bank cutting the official cash rate today.
However, some banks had also lowered their new customer variable home loan rates, too, which she said was unusual.
As reported on abc.net.au, Tindall said:
We are now seeing fixed rates fall into the 4's … we typically see fixed rates start to come down ahead of an anticipated RBA rate cut.
What is interesting at this point in time is we're also seeing new customer variable rates start to fall.
Tindall said there were 35 lenders on Canstar's database offering at least one variable rate under 5.75%.
What's next for dividends?
Top broker Macquarie says that while ASX 200 bank shares continue to target dividend payout ratios of 65% to 80%, they may struggle to keep dividends at current levels.
As reported in The Brisbane Times, Macquarie analyst Victor German said:
With weak organic capital generation and limited inorganic tailwinds, we expect dividend cuts for ANZ, NAB and WBC.
If you're looking for other options in the ASX 200 financial sector, here are 8 attractive alternatives to bank shares, according to the broker.
