Bank dividends to remain stable despite market noise

Despite the recent volatility in the share prices of our financial institutions, it is still far too early to call the end of the dividend play among the major bank shares. We believe the dividend narrative has some course to run in the intermediate-term, particularly with domestic interest rates set to continue at current historical lows. While the profits of the major banks are looking stable for the upcoming reporting period in early May, earnings growth is unlikely to be as easily found in the current environment, as was previously the case. Funding pressures, competition, and ongoing regulatory concerns will continue to keep banks at the cheaper end of historical valuation ranges. On an Earnings Per Share basis, however, we expect slightly negative growth over the short-term as a result of capital raises in late 2015, as the bank regulator, APRA, attempts to ensure domestic banks are among the global leaders in terms of capitalisation and asset quality. Read here to see more: (VIEW LINK)