Westpac’s Capital Notes 5 Distribution Hinges on Discretionary Payment Conditions
Westpac Banking Corporation announces a fully franked distribution of AUD 1.2110 per Westpac Capital Notes 5 for the quarter ending September 2025, reflecting a 4.8047% annualised rate based on prevailing market benchmarks.
- Distribution of AUD 1.2110 per Westpac Capital Notes 5
- Distribution rate set at 4.8047% per annum
- Fully franked dividend with 30% corporate tax credit
- Payment scheduled for 22 September 2025
- Distribution rate linked to 3-month BBSW plus fixed margin
Westpac's Latest Distribution Announcement
Westpac Banking Corporation has declared a distribution payment of AUD 1.2110 per Westpac Capital Notes 5 (WCN 5), covering the period from 23 June 2025 to 22 September 2025. This payment is fully franked, meaning it carries a 30% corporate tax credit for investors, a feature that enhances its attractiveness to Australian shareholders seeking tax-effective income.
How the Distribution Rate is Calculated
The distribution rate for this quarter is set at an annualised 4.8047%, derived from the 3-month Bank Bill Swap Rate (BBSW) observed on 23 June 2025, which was 3.6639%, plus a fixed margin of 3.20%. This sum is then adjusted for the corporate tax rate applicable to Westpac, resulting in the final distribution rate. The calculation reflects the terms outlined in the WCN 5 prospectus, ensuring transparency and consistency for investors.
Key Dates and Payment Details
The distribution will be paid on 22 September 2025, with the ex-distribution date set for 11 September 2025 and the record date on 12 September 2025. These dates are critical for investors to determine eligibility for the distribution payment. The fully franked nature of the dividend means investors receive a credit for tax already paid by Westpac, which can be offset against their own tax liabilities.
Implications for Investors and Market
For holders of Westpac Capital Notes 5, this announcement confirms a steady income stream linked to prevailing market interest rates, providing a degree of income predictability. The fully franked status enhances the effective yield, particularly for Australian resident investors. However, the payment remains subject to Westpac’s discretion and the satisfaction of distribution payment conditions, a standard clause for such capital instruments that investors should keep in mind.
Looking Ahead
As market interest rates fluctuate, future distribution rates on these notes will adjust accordingly, reflecting the dynamic nature of the underlying benchmark. Investors and analysts will be watching closely for any changes in Westpac’s capital management strategy or shifts in market conditions that could impact future distributions.
Bottom Line?
Westpac’s fully franked distribution on Capital Notes 5 underscores its commitment to delivering tax-effective income, but investors should monitor discretionary payment conditions closely.
Questions in the middle?
- Will Westpac maintain or adjust the margin component in future distributions?
- How might changes in the 3-month BBSW rate affect upcoming distribution rates?
- What are the implications if Westpac exercises discretion to withhold distributions?
