Morgan Stanley sees more buybacks from NAB, Westpac
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The news: Morgan Stanley analysts have flagged the likelihood of more capital management initiatives by the major banks when they report results in November.
The numbers: The analysts expect NAB to announce a $1 billion top-up to its ongoing share buyback, along with a 1 cent a share increase in dividend compared to the first half.
They are also forecasting a further $1 billion top-up to Westpac’s ongoing buyback and another special dividend of 15 cents a share, plus a 2 cents a share increase in the ordinary dividend compared to the first half.
The context: The analysts noted Westpac announced capital returns of $1.5 billion at each of its last two results.
“Given an estimated FY24 proforma CET1 ratio of ~12.3% and excess franking credits, we believe Westpac will announce a further ~$1.5 billion of capital management initiatives in November,” they said.
Similarly, NAB has a proforma CET1 of ~12.0% and only $0.6 billion of its $3 billion buyback to go, they said, forecasting NAB to announce a top-up to the buyback.
The analysts don’t see any such surprises from ANZ, with its dividend expected to be flat from the previous half.
“This implies an FY24 payout ratio of ~72.5% which is above the 60-65% target range, suggesting a dividend surprise is unlikely. At the same time, ANZ has completed only $0.9 billion of its $2 billion buyback, so an addition to the buyback is not our base case,” they said in a note.
The source: Morgan Stanley research
