KUALA LUMPUR (July 4): S&P Global Market Intelligence projects the aggregate dividend payout of the Asia-Pacific (APAC) banking sector to amount to US$209 billion (about RM922.21 billion) for fiscal year 2022 (FY22).

In a statement on Monday (July 4), the firm said the amount represents a moderate 7% year-on-year (y-o-y) increase, compared with a 14.7% growth in FY21.

It said economic policies in APAC are divergent, with mainland China and Japan continuing to keep their policies loose whereas the rest of the markets had largely tightened their monetary policies.

This has different implications for the outlook for their respective banking sectors. 

S&P said the growth rate of dividends from banks in mainland China, the biggest contributor of aggregate payouts in APAC, is expected to slow down in FY22 as the banks are experiencing tapered loan demand as well as pressure on their bottom lines from the country's Covid zero policy.

It said average dividend growth of the big four banks — the Industrial and Commercial Bank of China, Agricultural Bank of China, Bank of China and China Construction Bank — is expected to be 6.4% in FY22, compared with 11.5% in FY21.  

The firm said banks in Malaysia, Australia, South Korea and India are experiencing healthy growth in corporate loans, owing to an improvement in business conditions.

It said the positive impacts are expected to be compounded by the widening interest rate margin from interest rate hikes.

S&P said although the banks are set to benefit from the tailwind from higher interest rates, it sees a dissimilar growth path for banks even in the same market owing to different competitiveness in the loan market, cost control capability and asset mix.

For example, it said dividend payout growth of the top three banks in Singapore is expected to range from 9% to 20% y-o-y.