Commonwealth Bank of Australia announces a fully franked dividend of AUD 1.1154 per security on its PERLS XIII hybrid notes, scheduled for payment in March 2026.
- Dividend of AUD 1.1154 per PERLS XIII security
- Fully franked ordinary distribution for quarter ending 15 March 2026
- Ex-date 5 March, payment date 16 March 2026
- Annualised distribution rate of 4.5234% based on 3-month BBSW plus margin
- Distribution discretionary under PERLS XIII terms, paid electronically
Dividend Announcement Overview
The Commonwealth Bank of Australia (CBA) has declared a fully franked ordinary dividend of AUD 1.1154 per security on its PERLS XIII capital notes (ASX, CBAPJ). This distribution relates to the quarter ending 15 March 2026 and will be paid on 16 March 2026, with an ex-dividend date of 5 March and a record date of 6 March.
Understanding the Distribution Rate
The dividend reflects an annualised distribution rate of 4.5234%, calculated by adding a margin of 2.75% to the 90-day bank bill swap rate (BBSW) as at the start of the period, then adjusting for the 30% corporate tax rate. This approach aligns with the terms set out for PERLS XIII notes, which are hybrid securities designed to provide investors with a steady income stream linked to prevailing short-term interest rates.
Franking and Tax Implications
Importantly for investors, the dividend is fully franked, meaning it carries a 30% tax credit. This can be particularly beneficial for Australian resident investors, effectively reducing the tax payable on the income received. The announcement confirms there are no additional tax components or foreign income considerations attached to this distribution.
Discretionary Nature of the Payment
While the dividend is scheduled and expected to be paid in full, CBA retains discretion under the PERLS XIII terms and conditions to defer or cancel distributions if deemed necessary. This discretionary feature is common in hybrid securities and serves as a buffer to protect the bank’s capital position in times of financial stress. However, no approvals or external conditions are required ahead of this payment, indicating confidence in the bank’s current financial standing.
Investor Considerations and Next Steps
Distributions will be paid electronically, ensuring timely receipt for security holders. Investors should note the upcoming dates to ensure eligibility, the ex-dividend date on 5 March and the record date on 6 March 2026. Given the discretionary nature of future payments, market participants will be watching closely for any changes in CBA’s distribution policy or financial outlook that might affect subsequent dividends.
Bottom Line?
As CBA maintains its steady dividend on PERLS XIII notes, investors should stay alert to any shifts in distribution discretion that could signal broader capital strategy changes.
Questions in the middle?
- Will CBA maintain the current distribution margin amid changing interest rates?
- How might future discretionary decisions impact investor confidence in PERLS XIII notes?
- Are there any anticipated regulatory or market developments that could affect hybrid security distributions?