Watermark: Bank dividends at risk

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Omkar Joshi, Investment Analyst at Watermark funds says that banks have not deleveraged, they have anaemic profit growth and now appear expensive. “Banks have re-rated significantly and are now trading at historically high PE multiples. Higher capital requirements would likely hurt the ability of the banks to continue delivering high dividends to shareholders.” Furthermore, the “risks of dividend interruption and dilution from capital raisings do not appear to be fully appreciated in current share prices.”

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