Australian Banking Sector Update

Submitted by Share Trading on 21 April, 2008 - 13:02

Australian Banking Sector Update provided by Australian stockmarket analyst Macquarie Research Equities.

Australian Banking Sector – Will the Reports Deliver?

Is the worst behind us? Are the implicit impacts of sub-prime starting to dissipate? When will the financial sector recover? All of these questions have been the subject of much scrutiny lately as both professional analysts and retail investors speculate on the prospects within global equities. Central to this environment is the financial sector, and last week the global market was given further insight into the effects of sub-prime as some of the US major banks released interim reports. In particular JPMorgan and Citigroup, despite reporting losses, managed to renew some positive market sentiment. As a result the ASX200 financials have rallied 3.23% this morning; and with ANZ kicking-off the Australian banks reporting on Wednesday all eyes will be heavily focused on the ensuing banking results…Mmbl

Banking Sector Impacts

Macquarie Research Equities (MRE) highlights some of the recent impacts experienced by the Australian Banking Sector:

  • Banks underperformed the market by 2.1% last week. Banks were weaker as investors awaited further clarity overseas and possible new impairments from the upcoming 1H08 results.
  • WBC leads in reducing mortgage broker commissions. WBC became the first bank heavyweight to seek lower commission rates paid to mortgage brokers. MRE believe that they may be deliberating a reduction of 15 – 20 bps.
  • Potential $263m hit pending NAB tax ruling. The firm faces a possible $263m tax bill if an ATO ruling finds interest and expenses relating to exchangeable capital units are not tax deductible. Whilst not final, the potential losses coupled with NAB’s UK exposure remain a concern for investors.
  • Australian Banking Sector Upcoming Reporting Dates

    ANZ: 23/04/2008
    WBC: 01/05/2008
    NAB: 09/05/2008
    SGB: 06/05/2008

    MRE also emphasise that their sector preferences in the order of WBC, NAB, ANZ, SGB and CBA. Investors will be viewing the upcoming reports very closely, with any positives likely to buoy the market. Sub-prime fundamentally lies at the core of the financial sector and the impacts have clearly been wide-spread. Recent US banking reports reflected some positive signs and have managed to lift the American banking sector. If upcoming Australian banking reports can do the same it will likely lift the Aussie bourse.