The below-mentioned stocks are the leading banking groups of Australia which have returned a significant part of their Cash earnings to their shareholders in the form of dividends. Despite facing tough operating conditions in Australia, both the below-mentioned stock were able to maintain a dividend payout ratio of around 80 percent in FY 2018. Let’s take a closer look at these stocks-
Commonwealth Bank of Australia (ASX: CBA)
Australia’s leading provider of integrated financial services Commonwealth Bank of Australia (ASX: CBA) has demonstrated resilient business performance in the first quarter of FY 2019. The fundamentals of CBA’s business remained strong in Q1 2019 as the bank experienced continued deposit growth and sound credit quality during the quarter. The banking group reported a statutory net profit of around $2.45 billion in the September quarter of 2018. CBA reported a liquidity coverage ratio of 133 percent in the September quarter which is three percentage points higher than the June quarter of 2018. As compared to the June quarter of 2018, the cash NPAT of CBA increased by 11 percent in the September quarter.
In FY 2018, the company paid a full year dividend of $4.31 per share, fully franked which was 2 percent higher than the full year dividend of FY 2017. In FY 2018, the company maintained a dividend payout ratio of 80.4 percent which is 540 bps higher than the FY 2017 dividend payout ratio.
In the last six months, the share price of the banking group decreased by 6.06 percent as on 21 December 2018 and traded at a PE ratio of 12.820x. CBA’s shares traded at $70.330(+2.447% intraday) with a market capitalization of $121.53 billion.
Westpac Banking Group (ASX: WBC)
Australia’s Leading banking organization Westpac Banking Group (ASX: WBC) delivered flat financial result in FY 2018. Westpac’s net profit only increased by 1 percent to $8,095 million in FY18 which includes a 3 percent increase in the 2% increase in net operating income before operating expenses and impairment charges, a 3% increase in operating expenses and 17% decrease in impairment charges. These results reflect the tough operating conditions which are faced by Westpac in 2018. Further, the bank also experienced higher regulatory, compliance, and funding costs in 2018. The Net tangible asset per share of the company increased by 5 percent in FY 2018 to $15.39.
Further, the company maintained an expense to income ratio of 43.7 percent in FY 2018 which is 143bps higher than the FY 2017. Recently on 20 December, 2018 Westpac paid a final, fully franked dividend of 94 cents per share. The total dividends for 2018 were 188 cents per share which represents a payout ratio of 80 percent of cash earnings.
In the last six months, the share price of the banking group decreased by 18.03 percent as on 21 December 2018 and traded at a PE ratio of 10.030x. CBA’s shares traded at $24.190(+1.383% intraday) with a market capitalization of $82.86 billion.
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