Major Banks Set To Report Earnings

Posted on | by Todd | Leave a Comment on Major Banks Set To Report Earnings

The ANZ will announce its annual results on Thursday as the first of the major banks to report over the next three weeks. NAB will report next Thursday and WBC will report the following Thursday.

ANZ is expected to announce a full year cash profit of $6.89 billion and a DPS of 83 cents on revenue of $20.7 billion. Much of this gain is based on stronger owner-occupied home lending.

Analysts are expecting ANZ to be the first of the major banks to return capital to shareholders given its pro-forma position outlined by APRA last month.

At this point, the NAB’s profit forecast is expected to be $6.6 billion with a DPS of 99 cents.

MQG will report their half-yearly results this Friday. The numbers on the street are reflecting a profit of $1.1 billion with a DPS of $2.10 per share.

ANZ

NAB

 

Westpac

MQG

Rotation Out Of Banking Stocks

Posted on | by Todd | Leave a Comment on Rotation Out Of Banking Stocks

Since Treasurer Scott Morrison announced a banking levy in the May 9th budget, banking stocks have been sold off across the board.

It’s become clear that a fair percentage of this investment flow has rotated into the local Insurance names with IAG and Suncorp both posting material gains since early May.

We hold both of these stocks in client portfolios and they are now up 12% and 8% since mid-May, respectfully.

With respect to the re-valuation in the banking shares, NAB has posted a fresh low at 29.00 in early trade today.

Both WBC and ANZ are approaching the lows posted in early June, while MQG and CBA have held up better but are still pointing lower.

On balance, we continue to expect to see rotation out of the banking names to the benefit of the insurance stocks.

IAG

Suncorp

NAB

Bad News For Aussie Banks

Posted on | by Todd | Leave a Comment on Bad News For Aussie Banks

Australian banking names received a double-dose of bad news last night as the Parliament passed the $6.2 billion banking levy and Moody’s downgraded their long-term credit ratings citing risks associated with the local housing market.

Shares in all the major banks have opened lower today with Westpac half-a-percent lower. The banking stocks have posted a rebound over the last few sessions but now look poised to re-test the lower price levels seen in early June.

Our ongoing concern about the banking sector’s current valuations have been: limited growth in the loan generation area, as well as, deteriorating quality of their overall loan exposures.

The banking levy, which commences July 1st, and the prospects of higher funding costs due to the credit downgrade won’t improve the banking sector’s profitability over the longer-term.

ANZ

CBA

MQG

NAB

WBC

ALGO Signal Update: Take Profits In ANZ

Posted on | by Todd | Leave a Comment on ALGO Signal Update: Take Profits In ANZ

The ALGO engine gave a buy signal for ANZ on February 7th at $28.80. During yesterday’s session, the stock traded up to $32.85; within 20 cents of the $33.03 high posted on August 4th, 2015.

Looking back at that price action, after ANZ traded over $33.00 in August of 2015, the share price fell to $26.40 during the next three weeks.

That type of sell off is not our based case. However, with almost a $4.00 profit since the ALGO buy signal at $28.80, investors may want to consider taking profits or write covered calls on ANZ above $33.25.

The ALGO engine has given many profitable signals in the market, in general, and in the banking sector, specifically. We will look for the next buy signal to enter ANZ on the long side again.

Based on internal momentum indicators, $30.00 is the initial level of price support.

ANZ

Australian Bank Earnings

Posted on | by Leon Hinde | Leave a Comment on Australian Bank Earnings

On 2nd May, ANZ will report their half-year earnings. The market is expecting a net profit of around $3.7b and DPS for the half year of $0.80.

4th May, NAB will report their half-year earnings.  Net profit should be around $3.4b and DPS of $1.00.

5th May, Macquarie Bank reports. Net profit is expected to be similar to last year at $2.15b and DPS of $2.52

8th May, WBC report their half-year result. Net profit should be $4b and DPS $0.95

On average, the market is looking for approximately 3% underlying EPS growth among the banks and dividends to remain steady, or the same as the previous 12 months.

Charts – MVB (Vaneck Aust Bank ETF)

 

 

ANZ – December Quarter Earnings

Posted on | by Todd | Leave a Comment on ANZ – December Quarter Earnings

The headline data from ANZ shows that the bank had a strong start to FY 2017. However, the pick-up in property and trading income are going to be difficult to replicate into H2 2017.

ANZ delivered around $2 billion in cash profit, which was well above the street’s expectations of $1.7 billion. The higher numbers were underpinned by strong trading income and a $283 million bad debt charge versus an expected $446 million charge.

We note that historically ANZ has had higher Q2 bad debt charges compared to Q1

We would expect price resistance to emerge at or around the January 9th high of $31.80.

Chart – ANZ

Banks – Chart Update

Posted on | by Leon Hinde | Leave a Comment on Banks – Chart Update

US banks, (see chart below of JP Morgan), are breaking to the upside of their recent consolidation range, and this is likely driving the rebound in the share price of the Australian banks.

NAB reported a 1% fall in earnings following weak revenue growth and a pickup in expense growth. Bendigo Bank failed to deliver growth at the top or bottom line.

CBA reported slightly ahead of expectations with underlying profit growth of 2.8% or $4.9b for the half. ANZ’s quarterly update, (released Friday), reported a 31% rise in profits to $2b for the 3 months to December.

Across all banking results, the NIM or net interest margins, remain under pressure, as does top line revenue growth. These are the same concerns which caused the 10% sell off in banks at the start of this year.

We’ll watch with interest how prices behaves in both the XJO and our major banks this week, as we commence trading with price levels similar to the peak of early January.

Chart – CBA
Chart – ANZ
Chart – WBC
Chart – NAB
CHART – JPM

 

 

 

 

 

 

 

Early Days on The Bank Hedge

Posted on | by Leon Hinde | Leave a Comment on Early Days on The Bank Hedge

We’ve been running a hedge on the Australian banks; CBA through an in-the-money European March option, NAB using an in-the-money American February option and WBC a longer-term call option. In ANZ our preference has been to exit the trade altogether.

On Friday, our domestic banks started to see some profit taking and the catalyst could’ve been selling ahead of the US banking results and/or the announcement of weaker export data out of China.

JP Morgan and BoA’s results , released last night, were adequate on the bottom line but both companies missed on the revenue front. Increased dividends and share-buybacks helped support what otherwise would’ve been viewed as weak results.

Chart – CBA
Chart – WBC
Chart – NAB
Chart – ANZ