Westpac’s Capital Notes 10 Distribution Hinges on Discretion and Market Rates

Westpac’s Capital Notes 10 Distribution Announcement

Westpac Banking Corporation has confirmed a distribution payment of AUD 1.1789 per Westpac Capital Notes 10 (WCN 10) for the period spanning 23 December 2025 to 22 March 2026. This payment, fully franked at the prevailing corporate tax rate of 30%, is scheduled for 23 March 2026, with the ex-date set for 12 March and the record date on 13 March 2026.

Calculation and Rate Details

The distribution rate of 4.7809% per annum is derived from the 3-month Bank Bill Swap Rate (BBSW) of 3.7298% as of 23 December 2025, plus a fixed margin of 3.10%, adjusted for tax effects. This formula reflects Westpac’s approach to aligning returns on its capital notes with prevailing market interest rates while maintaining a tax-efficient structure for investors.

Implications for Investors

For holders of WCN 10, this distribution represents a steady income stream that is fully franked, meaning investors benefit from franking credits that can offset their Australian tax liabilities. The absence of any required approvals from regulators or security holders underscores the routine nature of this payment within Westpac’s capital management framework.

Context Within Westpac’s Capital Strategy

Capital notes like WCN 10 are a key component of Westpac’s tier 1 capital, helping the bank meet regulatory capital requirements while offering investors a hybrid security with fixed income characteristics. This distribution announcement signals Westpac’s ongoing commitment to rewarding investors in these instruments, subject to the bank’s discretion and prevailing conditions.

Looking Ahead

While this distribution is confirmed, it remains subject to Westpac’s absolute discretion and the satisfaction of payment conditions at the time of payment. Investors should monitor future announcements for any changes in distribution policy or market conditions that could influence returns on these capital notes.