APRA eases dividend restrictions for banks

Australia’s financial services regulator has eased restrictions around dividend payouts by banks and insurers but says they should moderate payments to sustainable levels.

The Australian Prudential Regulation Authority (APRA) had in April asked banks and insurers to seriously consider deferring dividends until the outlook is clearer, amid the economic impact of the coronavirus-related lockdowns on customers and businesses.

“Uncertainty in the economic outlook has reduced somewhat since then, and APRA has had the opportunity to review banks’ and insurers’ financial projections and stress testing results,” it said on Wednesday. 

The regulator, however, wants the boards of banks and insurers to retain at least half of their earnings when deciding on capital distributions for the remainder of the calendar year.

It also wants them to conduct regular stress testing to demonstrate ongoing lending capacity and continue to lend to support households and businesses.

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