Discretion Looms as CBA Announces PERLS XVI Dividend Payment
Commonwealth Bank of Australia announces a fully franked quarterly distribution of AUD 1.1484 per security on its PERLS XVI hybrid notes, reflecting a 4.6% annualised yield.
- AUD 1.1484 per security distribution on CAP NOTE CBAPM
- Fully franked ordinary dividend for quarter ending 15 December 2025
- Distribution rate annualised at 4.6061% based on 3-month bank bill swap rate plus 3% margin
- Ex-date 4 December 2025, payment date 15 December 2025
- Distribution discretionary under PERLS XVI terms but expected to be paid in full
Scheduled Distribution on PERLS XVI Notes
Commonwealth Bank of Australia (CBA) has announced a quarterly distribution payment of AUD 1.1484 per security on its CAP NOTE 3-BBSW+3.00% PERP NON-CUM RED T-06-30, commonly known as PERLS XVI. This payment is scheduled for 15 December 2025, with an ex-date of 4 December and a record date of 5 December. The distribution relates to the quarter ending 15 December 2025.
Fully Franked Dividend Reflecting Stable Income
The dividend is fully franked at 100%, meaning investors receive a credit for the tax already paid by the bank on this income. This is a key feature for income-focused investors, as it enhances the after-tax return on these hybrid securities. The distribution is classified as an ordinary dividend and is not subject to any external approvals, underscoring its routine nature.
Distribution Rate and Calculation
The total annualised distribution rate is 4.6061%, calculated by adding a margin of 3.00% to the 90-day bank bill swap rate (3.5802% at the rate-setting date) and adjusting for a 30% corporate tax rate. This reflects the hybrid nature of the security, blending a floating base rate with a fixed margin. The payment period covers 91 days from 15 September to 14 December 2025.
Discretionary Nature and Market Implications
While the distribution is scheduled and expected to be paid in full, the terms of PERLS XVI grant CBA discretion to withhold payments if deemed necessary. This introduces a degree of uncertainty for investors, although no indication has been given that the bank intends to exercise this discretion at this time. Distributions will be paid electronically, ensuring efficient delivery to security holders.
Investor Considerations
For investors, this announcement confirms a steady income stream from a major Australian bank’s hybrid capital instrument, supporting portfolio yield in a low-interest environment. However, the discretionary clause means investors should remain vigilant to any future announcements that might affect payment certainty. The fully franked status also enhances the attractiveness of these notes for Australian tax residents.
Bottom Line?
CBA’s PERLS XVI distribution underscores steady income but keeps investors alert to discretionary payment risks.
Questions in the middle?
- Will CBA maintain full distributions on PERLS XVI amid changing market conditions?
- How might shifts in the 90-day bank bill swap rate affect future distribution rates?
- What impact could regulatory changes have on the discretionary payment terms of PERLS XVI?
