“While ANZ’s business simplification is ongoing, ANZ’s result should be cleaner as divested businesses have negligible impacts on cash profit and one-off restricting and royal commission costs are not incurred,” Mr Mott said in a preview of the bank’s result.

Expectations for dividends or buybacks following the bank's $3.8 billion sale of its life insurance and wealth management arms should be tempered, with New Zealand's proposed tougher capital regime likely to absorb any unallocated capital from the sale proceeds.

According to Mr Mott, ANZ’s result will also be worth watching for lending volumes. ANZ is thought to be a leader in the expense verification space that has seen the bank move away from the controversial household expenditure method (HEM) to estimate applicants' ability to repay their loans.

On Macquarie’s numbers, ANZ's lending footprint has shrunk on a semi-annual basis to September while NAB has seen credit growth of 1.5 per cent and Westpac has seen credit growth of 1 per cent.

NAB’s credit growth has occurred during a period where many challengers such as Prospa and Judo Bank are trying to cut the business bank’s lunch.

Despite the stronger credit growth at NAB, its half-year results on Thursday are highly anticipated for all the wrong reasons. With NAB’s payout ratio drifting above 90 per cent on both cash and headline net profit figures last half, many are anticipating the dividend will be cut and the payout ratio recalibrated.

Both UBS and Macquarie are expecting NAB to cut the dividend from 99¢ per share to 80¢ per share and the payout ratio to be reduced to a more sustainable 80 per cent of earnings.

Some believe the chance of a dividend cut was heightened by the bank’s decision to update the market with a $749 million pre-tax charge for further customer remediation just prior to the Easter break, as part of a strategy to pace out the bad news.


UBS is working on the assumption another $500 million in compensation charges will emerge in the second half.

The consensus forecast for cash profit is $3.1 billion – the lowest of the big four. NAB’s common equity tier 1 or CET1 ratio is believed to be only marginally above the 10.5 per cent unquestionably strong benchmark established by the prudential regulator.

NAB’s margins will be provided with some relief by the bank’s decision to reward loyal home loan customers by not chasing new business with aggressively priced loans. At 40 basis points, NAB’s front-to-back book discounting (the difference between what it charges new versus established customers) is the smallest among the big four.

All of the banks have benefited from the extremely low level of bad and doubtful debts, with results from the last several years propped up by the byproduct of ultra-low interest rates.

Deutsche Bank analyst Matthew Wilson says although the cycle is turning, investors shouldn’t expect any big surprises.

“It’s too early in the cycle to expect a pop, however, we expect delinquencies and bad debts to creep higher,” he said ahead of results week.

Westpac’s results are the last to be published one week from Monday. The bank’s exposure to consumer and auto loans will be carefully scrutinised. Remediation is the big-ticket item for the bank, with the concern that an upward revision will eat into any savings from cost control.

Westpac has the largest exposure to the fees-for-no-service scandal via non-salaried advisers who operate under its licence. The bank has been as yet unable to quantify this charge, leading to speculation it could be on the hook for as much as $1 billion in compensation for this one channel alone.

During the royal commission hearings the bank revealed it was working with the corporate regulator on a formula to apply for refunds for customers of aligned advisers given their records were virtually inaccessible.

Consensus for cash profit at Westpac is $3.4 billion – down significantly from the $4.2 billion reported in the previous corresponding half. Westpac’s dividend is also pressure but not to the same extent as NAB.

Analysts have flagged the potential for dilutive and discounted dividend reinvestment programs as a means to bolster the payout.