Banks increasing capital

The banks are increasing more capital and their potential ROE may fall. Will this impact dividends, and if so, how will you review the income model portfolio?

A: I don’t think there will be any impact to bank dividends in the short term. They may not go up, really doubt that they will be cut.

Over the next 18 to 30 months, it is possible that Banks may be required to cut their dividends, however at this point in time, cuts (if any) will be pretty small.

The portfolio is about index weight on the banks – feel that this is broadly correct given the positive support from high dividends, negatives of lower ROE and capital raising indigestion.


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