Commonwealth Bank Sets 4.5% Annualised Distribution Rate for PERLS XV

• AUD 1.1222 fully franked quarterly dividend declared
• Distribution payable on 15 December 2025
• Dividend based on 3-month bank bill swap rate plus 2.85% margin
• Annualised distribution rate of 4.5011%
• Payment discretionary under PERLS XV terms

Dividend Announcement Overview

Commonwealth Bank of Australia (CBA) has declared an ordinary dividend distribution of AUD 1.1222 per security on its PERLS XV capital notes (ASX, CBAPL). This distribution is scheduled for payment on 15 December 2025, covering the quarter ending on the same date. Notably, the dividend is fully franked, meaning investors receive the benefit of Australian corporate tax credits, enhancing the after-tax return.

How the Dividend Is Calculated

The dividend rate is derived from the 90-day bank bill swap rate (BBSW) as of 15 September 2025, plus a margin of 2.85%. After adjusting for the 30% corporate tax rate, this results in an annualised distribution rate of approximately 4.5011%. This method aligns with the terms set out in the PERLS XV capital notes, which are perpetual, non-cumulative, and redeemable securities issued by CBA.

Implications for Investors

Investors holding these capital notes can expect a steady income stream with the added advantage of full franking credits, which can be particularly attractive for Australian tax residents. The distribution is scheduled to be paid via electronic transfer, with no approvals required from security holders or regulatory bodies prior to payment. However, it is important to note that under the PERLS XV terms, CBA retains discretion over whether to make distributions in full, introducing a degree of uncertainty for future payments.

Context Within CBA’s Capital Strategy

This announcement fits within CBA’s broader capital management framework, where such capital notes provide a hybrid funding source balancing cost and regulatory capital requirements. The steady dividend payment signals the bank’s ongoing confidence in its capital position and earnings stability, despite the discretionary nature of these distributions.

Looking Ahead

While this distribution announcement is routine, investors should monitor any future updates from CBA regarding changes in distribution policy or market conditions that might affect the discretionary payments on PERLS XV notes. The bank’s approach to managing these capital instruments will remain a key focus for fixed income investors seeking yield in a competitive market.

Bottom Line?

CBA’s fully franked dividend on PERLS XV notes underscores steady income potential, but discretionary payment terms warrant close investor attention.

Questions in the middle?

• Will CBA maintain full distributions on PERLS XV amid changing economic conditions?
• How might shifts in the bank bill swap rate affect future dividend rates?
• Could CBA alter its capital note distribution policy in response to regulatory changes?