Banks strong enough to keep on paying dividends

Ethical Partners Funds Management’s Nathan Parkin said the banks could continue to pay ­dividends, but if the external situation worsened, they could instead step up their dividend reinvestment plans to conserve cash flows. That would involve the issue of shares as some investors would opt to reinvest over taking cash. “That could be a better way to handle it,” Mr Parkin said, as retail investors would take a “serious hit” if bank dividends were suspended entirely because they ­accounted for 42-55 per cent of the major banks’ shareholder ­registers. “There is obviously going to be a need for debt provisioning that reflects the economic impacts. That will impact their [banks] level of dividends,” he added. “We don’t think that negates their ability to pay any dividends.”

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