Westpac reckons the government's new bank levy will hit second-half profit by $65 million and would be the equivalent of a 4.3 per cent cut to dividend over a full financial year.
The lender said on Monday the 0.06 per cent levy is expected to apply to $615 billion of liabilities when it kicks in on July 1, which works out at about $260 million after tax on an annualised basis.
Westpac paid a total $1.88 in dividends per share while making a $7.8 billion full-year profit in 2015/16, and said the $260 million charge works out as eight cents per security.
"No company can simply 'absorb' a new tax, so consideration is being given to how we will manage this significant impost on the bank," Westpac said in a statement released on the ASX.
Westpac did not commit to a reduced dividend but chief executive Brian Hartzer has previously warned that shareholders are among those who could carry the cost.
Westpac, whose financial year ends on September 30, said it still had only limited detail about how the levy would function.
"Westpac has strongly objected to the levy on the grounds that it is an inefficient tax that targets just five companies; it places the major banks at a competitive disadvantage relative to international peers; and it is a tax on growth because as lending and investment increases the cost of the levy also rises," Westpac said.
"A further objection is that the levy currently has no end date, so it becomes a permanent tax impost on companies that are already amongst Australia's largest taxpayers."
International rivals would not be subject to the levy, although HSBC is subject to the equivalent UK scheme.
At 1127 AEST, Westpac shares were up 29 cents, or 0.9 per cent, at $31.145.
Share
