Why Is CBA Paying a Fully Franked AUD 1.14 Dividend on PERLS XIV Now?
Commonwealth Bank of Australia announces a fully franked quarterly distribution of AUD 1.1405 per security on its PERLS XIV capital note, payable mid-September 2025.
- AUD 1.1405 fully franked dividend declared for CAP NOTE CBAPK
- Distribution payable on 15 September 2025 with ex-date 4 September
- Dividend based on 4.5247% annualised rate linked to 90-day bank bill swap rate plus margin
- No approvals required prior to payment; distribution discretionary under PERLS XIV terms
- Payment to be made via electronic transfer
CBA’s Scheduled Distribution Announcement
Commonwealth Bank of Australia (CBA) has confirmed a quarterly distribution of AUD 1.1405 per security on its CAP NOTE 3-BBSW+2.75% PERP NON-CUM RED T-06-29, commonly known as PERLS XIV. This dividend is fully franked, reflecting the bank’s ongoing commitment to delivering tax-efficient income to investors in its capital notes.
The distribution relates to the quarter ending 15 September 2025, with an ex-dividend date set for 4 September and a record date of 5 September. Payment is scheduled for 15 September 2025 and will be made by electronic transfer, ensuring a smooth process for security holders.
Understanding the Dividend Rate
The dividend rate for this period is calculated at an annualised 4.5247%, derived from the 90-day bank bill swap rate plus a margin of 2.75%, adjusted for the applicable 30% corporate tax rate. This methodology aligns with the terms outlined in the PERLS XIV capital note documentation, providing investors with a transparent and predictable income stream linked to prevailing market rates.
Importantly, the dividend is fully franked, meaning it carries a franking credit equivalent to the full amount of the distribution. This is a significant benefit for Australian investors, as it reduces the effective tax burden on the income received.
Discretionary Nature and Market Implications
While the distribution is scheduled and expected to be paid in full, CBA retains discretion under the PERLS XIV terms and conditions to reduce or omit the payment if necessary. This discretionary feature is common in hybrid capital instruments and serves as a protective mechanism for the bank’s capital position during periods of financial stress.
For investors, this announcement reinforces the stability of income from CBA’s capital notes but also highlights the inherent risks associated with discretionary distributions. Market participants will be watching closely for any signals from the bank regarding future payments, especially in a changing interest rate environment.
Looking Ahead
As the payment date approaches, investors will be keen to confirm the distribution’s execution and assess its impact on yield and portfolio income. The announcement also serves as a reminder of the importance of understanding the terms and conditions governing hybrid securities, particularly the balance between attractive income and discretionary payment risk.
Bottom Line?
CBA’s fully franked dividend on PERLS XIV underscores steady income potential, but discretionary terms warrant close investor attention.
Questions in the middle?
- Will CBA maintain full distributions if market rates shift significantly before September?
- How might changes in the bank bill swap rate affect future dividend calculations?
- Could CBA’s discretion to omit payments signal caution amid economic uncertainties?
