28 May 2021
- The ANZ, NAB and WBC results for the March half-year demonstrated comfortable provisioning, strong balance sheets, improving margins, and prudent funding. What was missing was organic growth.
- The banks’ loan write-downs in the next two years will be less than the provisions they made last year, but provision write-backs are no substitute for growth.
- We continue to believe that, although the banks will track Australia’s post-coronavirus recovery, they will underperform the market in the longer term.
Last November we said that the big four banks were on the road to recovery, and recommended that investors hang onto the banks as a leveraged play on Australian growth in 2021. Over the last six months the banks’ share prices rose by 35% or more: now the question is, can they keep on out-performing? [read more]