APAC Banking Sector Expected to Declare $209n in Dividends

S&P Global Market Intelligence says amidst the economic challenges worldwide, such as high inflation and slowed economic growth the banking sector is projected to deliver.

For that matter, S&P Global Market Intelligence projects the aggregate dividend payout of the APAC banking sector to amount to USD 209 billion for the fiscal year (FY) of 2022.

The amount represents a moderate 7.0% year-on-year (y/y) increase, compared to a 14.7% growth in FY2021.

Economic policies in APAC are divergent, with mainland China and Japan continuing to keep their policies loose whereas rest of markets have largely tightened their monetary policies. This has different implications for their outlook of the respective banking sector.

Banking growth

Growth rate of dividends from banks in mainland China, the biggest contributor of aggregate payouts in APAC, is expected to slow down in FY2022, as the banks are experiencing tapered loan demand as well as pressure on bottom lines from zero-covid policy.

The average dividend growth for the big four banks—Industrial and Commercial Bank of China, Agricultural Bank of China, Bank of China and China Construction Bank—is expected to be 6.4% in FY2022, as compared with 11.5% in FY2021.   

Banks in Australia, South Korea, India and Malaysia are experiencing heathy growth in corporate loans, owing to the improvement in business conditions. The positive impacts are expected to be compounded by the widening interest rate margin from interest rate hikes.

Although the banks are set to benefit from the tailwind from higher interest rate, we see dissimilar growth path for banks even in the same market owing to different competitiveness in loan market, cost control capability and asset mix. For example, the dividend payout growth in top three banks in Singapore is expected to range from 9% to 20% y/y.