|Bid||24.43 x 0|
|Ask||24.44 x 0|
|Day's range||24.40 - 24.59|
|52-week range||22.98 - 29.30|
|Beta (3Y monthly)||0.68|
|PE ratio (TTM)||12.10|
|Earnings date||31 Oct 2019|
|Forward dividend & yield||1.60 (6.55%)|
|1y target est||28.83|
(Bloomberg Opinion) -- For decades now, Australian banks have been a class apart.Thanks to a ceaselessly growing economy, an oligopolistic structure that prevents mergers between the big four lenders, and the loyalty of self-funded retirees who play a large part in the local stock market, they’ve been valued as if they’re in a fundamentally different business from counterparts in other countries.At their peaks, Commonwealth Bank of Australia, Westpac Banking Corp. and Australia & New Zealand Banking Group Ltd. were all priced at more than three times book value. That’s extraordinary in an industry where the share price should tend to cleave fairly close to the value of net assets, and where the median valuation among large banks in developed markets is 0.77 times book.(1)Tuesday’s announcement that Westpac Chief Executive Officer Brian Hartzer has resigned after the company was accused of 23 million separate breaches of money-laundering regulations should be a wake-up call. While valuations have slipped in recent years thanks to a teetering housing market and a government inquiry into the sector, Australia’s banks still have further to fall.If you look at them in terms of return on equity, the big four are distinctly middle-of-the-road. All are around the median deciles relative to their peers in other countries except for Commonwealth Bank, with National Australia Bank Ltd. somewhat below the midpoint. Switch to price-book measures, though, and they’re close to the top of the pack, with the Commonwealth at number three in the world.The best explanation for this is probably their reputation as excellent dividend payers. Given the vast uncertainties around bank earnings due to regulatory requirements and the fuzziness of working capital and capital expenditures, dividends are often regarded as the most solid basis for a real understanding of a bank’s future cashflows. Given that shareholders are ultimately paying for a right to a slice of those cashflows, it’s natural that banks with above-average dividend yields should have above-average valuations, too.Australia is relatively exceptional on that front. All of the big four barring the Commonwealth are in the second-highest decile among their peers in terms of analysts’ estimates for blended-forward 12-month dividend yields. Combined with the fact that Australia’s army of affluent retirees show an unusual loyalty to household-name blue-chip companies that pay a reliable income stream of shareholder returns, it’s little wonder the sector is outperforming.There’s a problem on the horizon, though. As Bloomberg News’s Emily Cadman has written, the dividend party could be coming to a close. Payouts have already been reduced at Westpac and National Australia Bank, and ANZ has cut the amount eligible for tax refunds, as the big banks have been forced to set aside more capital by the regulator.Such balance sheet reinforcement should at least be a temporary measure, but even once they’re paid there are further risks to cashflows. Australia’s economy is slowing, as my colleague Daniel Moss has written.Interest rates, as measured by three-month interbank benchmarks, look closer to those in the U.K. than the country’s bank valuation peers in the U.S. and Canada. That’s likely to have a rough knock-on effect on earnings, given the tight relationship between borrowing costs and net interest margins, a key determinant of bank profits.Even if the current rebound in the housing market translates into a more sustained upswing, there are challenges. Any banks wanting to take advantage of that by lending more aggressively are going to need to find a way to attract more deposits, which will put further pressure on interest margins given the low rate environment.All of that should serve to reduce the reliability of those dividend payouts — and without that, Australia’s retirees may find there are other blue-chip businesses worthy of investment.Westpac shares have reacted positively to the news of the clean-out at the top of the bank, but don’t expect the big four to find recovery from their malaise easy. Australia’s banks have been cash machines while the economy prospered. As it struggles to relight the fire that powered it for the past three decades, that money could be drying up, too. (1) We've confined our universe to banks with more than $100 billion in assets in North America, Western Europe and developed Asia-Pacific markets.To contact the author of this story: David Fickling at email@example.comTo contact the editor responsible for this story: Matthew Brooker at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.David Fickling is a Bloomberg Opinion columnist covering commodities, as well as industrial and consumer companies. He has been a reporter for Bloomberg News, Dow Jones, the Wall Street Journal, the Financial Times and the Guardian.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
The goal of this article is to teach you how to use price to earnings ratios (P/E ratios). We'll look at Australia and...
Oil prices rose on Tuesday after China signaled progress in trade talks with the United States and OPEC and its allies mulled deeper production cuts, but gains were capped by forecasts of a buildup in U.S. crude stockpiles. Brent crude oil settled up 74 cents, or 1.3% at $59.70 a barrel, while U.S. West Texas Intermediate crude was 85 cents, or 1.6%, higher at $54.16 per barrel. OPEC and its allies plan to consider whether to deepen cuts to crude supply when they next meet in December due to worries about weak demand growth in 2020, sources from the oil-producing club said.
Oil prices rose about 1% on Friday as an increase in U.S. jobs eased some financial market concerns that a slowing global economy could dent oil demand, but crude fell more than 5% on the week, its second consecutive weekly decline. Brent crude futures gained 66 cents, or 1.14%, to settle at $58.37 a barrel. West Texas Intermediate (WTI) crude futures rose 36 cents, or 0.7%, to settle at $52.81 a barrel.
A look at the shareholders of Australia and New Zealand Banking Group Limited (ASX:ANZ) can tell us which group is...
For many, the main point of investing is to generate higher returns than the overall market. But the main game is to...
The AUD/USD is trading higher after the consumer inflation report because traders are reducing the chances of a rate cut in August. However, the RBA is still likely to cut rates again in October after it receives more information on the labor market, growth and the initial impact of both the government’s tax refunds and the June/July rate cuts.
Shayne Elliott became the CEO of Australia and New Zealand Banking Group Limited (ASX:ANZ) in 2016. This analysis aims...
Oil prices were little changed on Friday and were on track for a second straight week of gains, ahead of talks over the trade dispute between the U.S. and Chinese presidents this weekend and on production cuts from OPEC on Monday. Brent August crude futures were up 19 cents at $66.74 a barrel by 1:50 p.m. ET (1750 GMT), ahead of expiry.
Oil prices fell on Friday but posted their second straight week of gains ahead of trade talks between the U.S. and Chinese presidents this weekend, and on widely expected production cuts from OPEC on Monday. The most active September Brent crude futures fell 93 cents to settle at $64.74 a barrel. Brent August crude futures settled unchanged at $66.55 a barrel.
Investing.com - Asian markets were mixed in morning trade on Monday as Hong Kong stocks traded in the green after another mass protest over the weekend that forced an apology from the city’s chief executive.
Today we'll take a closer look at Australia and New Zealand Banking Group Limited (ASX:ANZ) from a dividend investor's...
Want to participate in a short research study? Help shape the future of investing tools and you could win a $250 gift...