Westpac and St George largest bank by market cap

A merger of Westpac and St George would create Australia's largest bank with a market capitalisation of $64 billion, based on Friday's share price close before the Monday trading halts.

Commonwealth would then move to second at $58 billion, with National at $53 billion and ANZ $44 billion.

Declining bank share prices have pushed dividend yields substantially higher, with the bank sector returning around 6.1 per cent, compared to 5.3 per cent for the broader All Ordinaries.

Westpac increased its interim dividend eleven per cent to 70 cents, with the dividend payout ratio increasing two percentage points over the corresponding period to 71.3 per cent.

St George leads majors in dividend yield at 6.5 per cent, with the six cent interim dividend increase bringing the total to 88 cents, representing a 81.8 per cent cash basis half year payout ratio.

Commonwealth Bank increased its interim dividend six cents to $1.13 per share, and will satisfy dividend reinvestment plans with an on market purchase of shares up to $550 million, with the remainder new shares issued.

The cash basis dividend payout ratio for the half year is 63 per cent.

The National Australia Bank interim dividend surprised the market, up ten cents to 97 cents, representing a 70.5 per cent cash earnings payout ratio for the half year.
Australia and New Zealand Bank did not increase the interim dividend, which was maintained at 62 cents.

With profit down, the ordinary share dividend payout ratio increased to 61.4 per cent, up from 54.9 per cent a year earlier. The final dividend in September 2007 had a payout ratio of 67.1 per cent.