SYDNEY (Reuters) – National Australia Bank Ltd, the country’s No.3 lender, asked investors for A$3.5 billion ($2.2 billion) and slashed its dividend on Monday as its first-half profit tumbled in part due to charges associated with the coronavirus pandemic.

The planned capital raising, via a discounted share sale, is the biggest by an Australian company since the virus outbreak, which has killed 83 people in the country and shut down large parts of the world’s 12th-biggest economy.

The bank said it decided to pay more than A$850 million in dividends, only about a third of what it paid in the previous two halfs, rather than halting it altogether as it did not want investors who depended on the income to dump the stock.

Its decision follows a regulatory directive to consider postponing shareholder payouts until the impact of the pandemic was better known.

NAB, which brought forward its results by 10 days, is the first Australian bank to report earnings since the pandemic arrived in the country and so portends what could come from the rest of the sector.

Its call to pay a 30 cents per share interim dividend versus 83 cents last year may influence capital management decisions at other large lenders that are scheduled to report financial results over the coming fortnight, with Australia and New Zealand Banking Group due to report on Thursday.

“It was a balancing act,” NAB CEO Ross McEwan told analysts on a call referring to the bank’s capital raising and dividend decisions. “I think 48% of our shareholding is retail, we don’t want them running out the door at the same time we are doing a capital raise.”

McEwan, who started in the role in December, has taken a 20% cut in his base pay amid the coronavirus crisis.

NAB shares were in a trading halt while the bank sought to raise A$3 billion from institutional investors and another A$500 million from retail investors. It is looking to sell shares at a 8.5% discount to the last closing price of A$15.46, adjusted for the interim dividend, it said.

NAB DECISION ‘CAUTIONARY’

As investors feared more capital raisings from the rest of the Big Four lenders, shares of Commonwealth Bank of Australia, Westpac Banking Corp and ANZ fell more than 3% in a flat overall market.

“We think NAB’s decision is cautionary because there is still a lot of uncertainty,” said Jun Bei Liu, a portfolio manager a Tribeca. “I expect both Westpac and ANZ could follow given they are facing a very similar situation.”

NAB’s bad debt charges were at A$1.16 billion for the six months to March, more than double the A$470 million in the previous six months ended September, to account for expected credit losses from an economic downturn that could trigger a 10% drop in home prices, its base case scenario.

That included a A$807 million charge, which analysts described as “light”, to reflect potential COVID-19 impacts, pushing NAB’s underlying net profit down 51% to A$1.44 billion for the six months to March 31.

NAB is the country’s biggest lender to small businesses, which have been hit hard by the coronavirus pandemic.

“We have spoken to tens of thousands of small businesses and they’re hurting badly … and it was so sudden,” McEwan said.

($1 = 1.5640 Australian dollars)