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As foreshadowed by the Chairman in the 2015 Annual Report, and again at the 2015 AGM, the Board has undertaken a review of the non-binding, indicative Dividend Guideline released in 2012.

A number of factors have been considered by the Board including:

  • APRA’s determination as to the prudential treatment of IMB’s ordinary shares;
  • regulatory changes likely to flow from Basel IV;
  • PwC Securities Report on Contributed Funding;
  • IMB’s performance and strategic growth objectives;
  • The current low interest rate environment and expected future operating environments; and
  • The effective dividend payout ratio based on shareholders’ interest in the contributed funding of IMB.

The outcome of these deliberations is that while IMB’s capital adequacy ratio is above 14% and profits are maintained or increased, the Board’s current intention is to pay a full year dividend of 20 cents per share for 2016/17.

As previously cautioned by the Chairman, following the two most recent RBA reductions to official interest rates, continuing pressures from the competition for loans and deposits, and in the context of expected regulatory capital requirements, the ability to maintain profits at the 2015-2016 level will be challenging.

The Guideline for 2016/17 is non binding and should not be taken as an indication of the dividend that might be paid after the 2016/17 year.

Further, while it remains only one of the factors considered by the Board when determining the level of dividends to be paid, the Board’s expectation is that, going forward, the dividend is likely to fall within an effective payout ratio range of 65% to 80% based on shareholders’ interest in contributed funding (with reference to Approach 2 of the PwC Securities Report on Contributed Funding).

For the information of shareholders, as an example, if the effective payout ratio range of 65% to 80% had been applied to the 2015/16 result, a full year dividend (based only on this factor) would have fallen between 17 cents per share and 20 cents per share.

A copy of PwC Securities’ Report is available here.

Capital Management

The Board remains committed to its previously announced share buy-back program as outlined in its Annual Reports and market disclosures.  Shareholders will be advised once a final decision has been made by the Board in respect of the next share buy-back.

 

Dated: 28 September 2016

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