Diverging results in Australia’s major banks

Roger Montgomery

Montgomery Investment Management

We have just come through another bank reporting season and the results were generally a bit softer than expected, with quality weaker than the reported numbers would otherwise indicate. If we look at the performance of each of the stocks between 26 Oct and 10 Nov (adding dividends for NAB and ANZ), there has been a clear divergence in the performance of the major banks. ANZ and NAB have underperformed post results, while WBC and CBA have outperformed slightly. One of the major points of differentiation between the major bank results was the performance on net interest margins (NIM). WBC’s result showed a positive outcome on NIM relative to expectations, increasing 4bpts on the first half average. CBA’s 1Q16 NIM was down slightly on 2H15 levels, but flat excluding Treasury & Markets. While ANZ’s average NIM improved, this was largely due to a fall in the loan balances of the company’s low margin Asian operations. The largest fall came from NAB. In general, business margins were under pressure, while retail margins were more stable helped by improved funding costs. (VIEW LINK)

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Roger Montgomery
Founder and Chairman
Montgomery Investment Management

Roger Montgomery founded Montgomery Investment Management in 2010. Roger has more than three decades of experience in investing, financial markets and analysis. Roger also authored the best-selling investment book, Value.able.

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