Banking Sector Update

Submitted by Jim Thesiger on 2 June, 2008 - 22:04

Here are the Macquarie Research Equities (MRE) highlights on some of the recent impacts experienced by the Australian Banking Sector.

Bank Opportunities

The Australian Banks outperformed the market by 3.3% last week, yet are still trading significantly below their November 2007 highs. Headlining recent developments in this area has been the proposed merger between WBC and SGB. Macquarie Research Equities (MRE) review the week in question and reaffirm their guidance for the sector. Click through to find out more…

Banking Sector Impacts

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

  • Banks Outperform market by 3.3%: For the majors SGB led the pack by increasing 5.9%, WBC up 3.3%, ANZ up 3.2%, CBA flat while NAB fell 0.7%. Of the regional banks BEN surged 8.4% AND BOQ was up 0.1%;
  • WBC/SGB progress with proposed merger, market awaiting rival bid: WBC and SGB signed a merger implementation agreement last week and reported no change to the original bid. Accompanying the announcement were details of synergy and value expectations with potential economic benefits to the tune of circa $320m. MRE further deliberate that the deal is likely to become EPS accretive by 2011.
  • Reports of ANZ payment to Opes Prime inaccurate: ANZ has dismissed claims that it is looking to pay $350m as a commercial settlement with Opes Prime customers. The speculation comes on the back of an opinion that ANZ may look to appease the matter quickly given the chance of further “reputational” risk.
  • Further signs of slowing credit growth: Recent RBA figures indicate the lowest month of credit growth since October 2002 at 0.4%. Whilst housing credit remains somewhat resilient, it is business growth that has pulled back from above the 20% mark.
  • MRE Pick of the Crop:

    In order of preference MRE reaffirm their banking sector picks as WBC, NAB, ANZ, SGB and CBA. Regional preferences remain as BOQ and BEN in that order.

    The complexity of market activity over the last 12 months has certainly caused considerable investment uncertainty. With many investors feeling the pinch in their margin lending accounts, perhaps a protected lending strategy would provide some comfort for investors still looking for Australian equity exposure. If a leveraged and protected strategy appeals to your financial needs have a look at the MQ Listed Protected Loan – the next generation in protected lending:

    MQ LPL Website: www.macquarie.com.au/lpl

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