Three ways banks could pass on costs arising from The Murray Inquiry

Three ways banks could pass on costs arising from The Murray Inquiry. Westpac CEO, Gail Kelly, has outlined the likely ways the cost of raising any additional capital requirements would be funded. Ms Kelly says increasing variable mortgage rates, cutting deposit interest rates or reducing dividends would all be in the mix. There is a cost to capital - it is not free. Most businesses, if they carry additional costs, end up pricing for them. Another avenue is you accept a lower return but that is not cost-free either, because the consequences of that is you have lower returns and lower -dividends. And that has a multiplier impact on the economy as well. Morgan Stanley has outlined the potential impact on dividends for the Big Four banks. ANZ would cut its 2017 full-year dividend by 2.9% 6¢ a share; Westpac's by 1.4% or 3¢ a share; and CBA by 0.6% or 3¢ a share. NAB would have a higher dividend because the -broker considers higher capital would be generated by asset sales in the UK. (paywall) (VIEW LINK)


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