Westpac bemoans impact of $6.2b new levy

WESTPAC chief Brian Hartzer says the bank may have raised its dividend had the Federal Government not hit the sector with a $6.2 billion tax.

Speaking as Westpac yesterday posted a $7.99 billion net profit for the year to September, Mr Hartzer said there was a “possibility” the bank might have paid a higher final dividend.

In May, the Government unveiled plans to raise $6.2 billion over four years with a new levy to the major four banks and Macquarie.

Westpac says it shouldered a $95 million cost for the tax, which was introduced on July 1, in the three months to September. That was the equivalent of 2c for each share, Mr Hartzer said.

“The 2c per share effectively came out of retained earnings,” he said. “And that means that was 2c that wasn’t available to be considered for dividends.

“But equally it wasn't available to be invested in customer service or training our people or whatever else we would have done.”

Westpac left its dividend steady regardless, but the tax was “absolutely a consideration in the dividend we set”, Mr Hartzer said.

Westpac is paying an unchanged final dividend of 94c a share, fully franked, taking its full-year payout to $1.88.

The bank is embroiled in legal action amid allegations levelled by the Australian Securities and Investments Commission that its traders conspired to rig a benchmark lending rate known as the bank bill swap rate, or BBSW.