Financial Services
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4 key issues for bank shares in 2017
Stuart Jackson
January 18, 2017
The outlook for Australia’s banks in 2017 is now tougher given the rerating of the stocks the last quarter of 2016. The expectations built into share prices have clearly lifted in 2017. The big change we expect is a slowing of loan book growth. If interest rates have bottomed, affordability of debt will suffer. Market expectations imply a continuation of the growth rates we’ve seen over the past decade or two, but if the cost of debt stops falling this could act as a drag on loan book growth and the broader economy. Funding costs continue to rise, pressuring net interest margins. Slowing loan book growth is also likely to increase competitive pressure as banks look to gain market share as an offset.
by Stuart Jackson Posted in Editor's Pick, Financial Services.
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Banks are about to be hit by falling loan book growth
Stuart Jackson
December 14, 2016
As we have noted before, the outlook for loan book growth is one of the main factors that drive the prospects for bank earnings growth. The issue for the banks – and investors in the sector – is that rates are more likely to rise in the medium to longer term, and this will put downward pressure on loan book growth.
continue…by Stuart Jackson Posted in Financial Services.
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Bank reporting season highlights costs and slowing revenue growth
Stuart Jackson
November 14, 2016
Over the last week, ANZ, NAB and Westpac reported their full year 2016 results, while CBA provided a trading update for the September quarter. So I thought it would be a good time to review the key themes to emerge.
by Stuart Jackson Posted in Editor's Pick, Financial Services.
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Can the banks maintain their dividends?
Stuart Jackson
October 6, 2016
Back in May, when ANZ cut its dividend and flagged a lower dividend payout ratio, it was a strong signal that bank investors should not count on an unending stream of rising dividends. As dividend payments is a topic close to most retail investors’ hearts I thought it would be timely to take a closer look at what the future holds. continue…
by Stuart Jackson Posted in Financial Services.
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Is Deutsche Bank about to bring on a fresh financial crisis?
David Buckland
September 30, 2016
According to the IMF, “Among the globally systemically important banks, Deutsche Bank (DB) appears to be the most important net contributor to systemic risk”. So the news engulfing Deutsche Bank is a big concern for global markets – or at least it should be. continue…
by David Buckland Posted in Financial Services, Global markets.
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Falling loan book growth is a warning signal for bank investors
Stuart Jackson
September 21, 2016
Our big banks are a core holding in most Australian portfolios. But with long-term loan book growth likely to be materially lower in coming years, bank profits – and share prices – could be adversely impacted. continue…
by Stuart Jackson Posted in Financial Services.
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With Italian banks in trouble, which route will Merkel take?
David Buckland
August 18, 2016
With Italian banks carrying non-performing loans estimated at US$400 billion, we wonder whether Germany will offer them financial assistance to prevent the unravelling of the EU. Or could the troubled banking sector make Italy the next European domino to fall? continue…
by David Buckland Posted in Financial Services.
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How to assess Henderson post-Brexit
Scott Shuttleworth
August 9, 2016
Before Brexit, Henderson Group PLC (ASX: HGG) was a core holding for many Australian investors seeking international exposure. Since then, its share price has plunged about 20 per cent. HGG has just reported its 1H16 result, and we still like the business, but there are some provisos. continue…
by Scott Shuttleworth Posted in Financial Services, Stocks We Like.
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Under pressure
Stuart Jackson
August 3, 2016
After the RBA’s latest cut to official rates, many investors will be tempted to take some of their money out of cash in pursuit of the high dividend yields offered by our banks. But are these yields sustainable as the banks feel the squeeze from margin pressure and increased liquidity requirements? continue…
by Stuart Jackson Posted in Economics, Financial Services.
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Will growing reliance on mortgage brokers hit the banks’ brand power?
Stuart Jackson
July 5, 2016
In recent years, we’ve seen CBA, ANZ and Westpac increasingly turn to brokers to originate mortgages. But could this trend erode their brand value and, consequently, reduce their ability to generate a higher than normal return on capital? continue…
by Stuart Jackson Posted in Editor's Pick, Financial Services.
