Australian Bank Trends – WBC & ANZ Breakout

Posted on | by Leon Hinde | Leave a Comment on Australian Bank Trends – WBC & ANZ Breakout

We now have ANZ and WBC creating a higher low formation. However, CBA and NAB still remain below the recent highs within the downtrend that’s been in place since May 2015.

Back in August, ANZ was the first to break the downtrend and now WBC has followed. Within the regional banks, between BOQ and BEN, it’s Bendigo that’s displaying a more bullish price pattern.

Although the breakout in financials is strong at present, we don’t see too much further upside. As reflected in the recent earnings results, the banks are having difficulties growing top line revenue. Our largest bank exposure in client portfolios is Westpac. We’ve left this name uncovered at present, however, it’s likely we’ll identify a point this week to add covered calls to enhance the yield.

ANZ goes ex-dividend $0.80 on Monday & WBC also goes ex-dividend $1.00 on Monday.

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Chart – ANZ
wbc
Chart – WBC
cba
Chart – CBA
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Chart NAB
Chart - BEN
Chart – BEN
boq
Chart BOQ

National Australia Bank – 2H16 Earnings

Posted on | by Leon Hinde | Leave a Comment on National Australia Bank – 2H16 Earnings

National Australia Bank delivered 2H16 earnings which showed strong organic capital generation and underlying earnings trends that were relatively strong compared to their banking peers. In addition, it’s also worth noting that the SME business segment is showing early signs of a pickup in credit growth; this is an area where NAB has traditionally led its competitors.

NAB trades on almost a 10% discount to its peers and we may begin to see scope for this discount gap to close.

Consistent across all the major banks, we continue to see mortgage margins under pressure. This remains a concern, especially for Westpac and CBA as they’re likely be impacted the greatest by declining mortgage margins.

NAB FY17 underlying profit is expected to be $10b on EPS of $2.30 and DPS of $1.70 placing the stock on a forward yield of 6.5%.

Financials globally are getting a boost following the US election, however, we remain cautious and look to sell call options into the rally.

nab
Chart – NAB

Westpac Bank – 2H16 Earnings Result

Posted on | by Leon Hinde | Leave a Comment on Westpac Bank – 2H16 Earnings Result

Westpac 2H16 earnings result was in-line with market expectations and the dividend was maintained. 2H16 cash profit came in at $3.9b and DPS $0.94 with a payout ratio of 80%. ROE has fallen from 15% to a target of 13 – 14%.

Revenue growth was slightly negative which has been the case across most of the recent banking results.

FY17 outlook is for revenue to remain flat and underlying profit to be 3% higher at $12.6b, on EPS of $2.38 and DPS of $1.88 placing the stock on a forward yield of 6.3%.

We’re running covered calls over the bank holdings to enhance returns in what we see as a low growth environment.

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Chart Westpac Bank

 

 

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