Westpac holds dividend from shareholders to preserve capital during coronavirus pandemic

Westpac has refrained from issuing a dividend to its shareholders, warning COVID-19 is still causing significant downward pressure on the economy.

Westpac has refrained from issuing an interim dividend to its shareholders. Picture: NCA NewsWire / Jono Searle

Westpac has refrained from issuing an interim dividend to its shareholders, warning ongoing uncertainty induced by the coronavirus pandemic continues to plague Australia’s banking industry.

The country’s second-largest bank has posted an unaudited net profit of $1.12 billion for the third quarter of 2020, higher than the 2020 quarterly average of $595 million.

Quarterly cash earnings were $1.32 billion, which was also higher than the average for the previous two quarters.

Westpac said the rise was due to lower impairment charges incurred compared with the previous quarter. Impairment charges for the third quarter were $826 million.

The bank will also not issue a half-yearly dividend to shareholders, saying there is need to preserve capital while the pandemic continues to put downward pressure on the economy.

Westpac CEO Peter King says the economy is still plagued by uncertainty due to the coronavirus pandemic. Picture: Jane Dempster/The Australian

Westpac chief executive Peter King said COVID-19 had caused business activity to fall, with customers still needing additional financial assistance during the downturn.

“While there have been some signs that the economy is performing better than early

expectations, significant uncertainty remains, particularly given the unpredictability of

COVID-19 outbreaks and their local impacts,” he said.

“Many mortgage and business customers continue to require assistance, and we are committed to supporting them.”

Approximately 78,000 mortgage and business customers still have their loan repayments on pause with the bank. The deferrals are worth around $30 billion.

Westpac said it was contacting customers to see if further assistance is required.

“We continue to offer deferral support where needed, although following our three-month customer check-ins the number of outstanding mortgage deferrals is down around 40 per cent,” Mr King said.