Ord Minnett reveals its favourite ASX banking stock

The Morning Wrap

Livewire Markets


Source: Investing.com


Source: Yahoo Finance


Source: Forex Factory

The good news? There isn't a lot to watch next week. The bad news? The limited number of risk events doesn't mean you can sit back and relax. 

The Reserve Bank and the Bank of Canada both meet next week for the final time this year, and the wide expectation for the former is a 25 basis points hike in the cash rate. What is up for debate is whether this hike will be the last in the present cycle, or whether we'll see more hikes next year. (We should get a clear idea of that when the Q4 inflation print drops on January 27th.)

GDP is also on tap for Q3, with economists expecting another slow down - and if you believe the economists at NAB, it won't stop there either.

"On GDP we now expect growth to slow to below 1.0% over the next two years. This includes some very soft quarterly growth in the back end of 2023 and is well below trend growth of around 2.25-2.5%."

Definitely not what a politician needs to hear before Christmas.


And speaking of banks, Ord Minnett has re-rated and re-adjusted its views on the ASX banking sector ahead of the RBA's last meeting of the year. The major bank FY22 reporting season was one of the more positive of recent years, with net interest margins surprising to the upside on interest-rate leverage. Those interest rate rises are finally doing wonders for its balance sheet. Unfortunately for the sector, competition is increasing as are costs. 

In Ords' view, there are also only four more RBA hikes coming. That makes the case for owning a retail bank a little tougher as well. 

In light of this, here is their new preferred order of ASX banking stocks:

  1. Macquarie Group (ASX: MQG) - is also the only major bank stock to earn a BUY rating.
  2. National Australia Bank (ASX: NAB)
  3. Judo Bank (ASX: JDO) - only fintech/non-Big Five bank to earn a BUY rating.
  4. ANZ (ASX: ANZ)
  5. Bendigo and Adelaide Bank (ASX: BEN)
  6. Bank of Queensland (ASX: BOQ) 
  7. Commonwealth Bank (ASX: CBA)

Finally, you will notice one name is not mentioned here and that's Westpac. Ords has a "restricted" view, meaning they can't cover the stock for legal or regulatory reasons.


The beauty of this time of year is we get more economic outlook projections for the year ahead. We've been through plenty of them already (Morgan Stanley, JP Morgan Asset Management, Deutsche Bank, TD Securities, and Macquarie) but another house has sent through their predictions - Citigroup.

And next year could be a tough one across a slew of economies. The UK is already in a recession, and the Bank of England thinks this latest recession could last two more years. The rest of the Eurozone will likely be in recession from this quarter. In the US, the team projects a recession will start in Q3 next year.

And unsurprisingly, the loosening economies (Japan and China) are not projected to be in a recession next year. Well, at least until it happens.


Sam, please listen to your lawyers.

Hans Lee wrote today's report. 


If you've enjoyed this edition, hit follow on this profile to know when we post new content and click the like button so we know what you enjoy reading.

If you have a chart and/or a stat that you would like to see featured in a future edition of the newsletter, drop us a note at content@livewiremarkets.com.

Livewire gives readers access to information and educational content provided by financial services professionals and companies (“Livewire Contributors”). Livewire does not operate under an Australian financial services licence and relies on the exemption available under section 911A(2)(eb) of the Corporations Act 2001 (Cth) in respect of any advice given. Any advice on this site is general in nature and does not take into consideration your objectives, financial situation or needs. Before making a decision please consider these and any relevant Product Disclosure Statement. Livewire has commercial relationships with some Livewire Contributors.

1 contributor mentioned

The Morning Wrap
Markets Wrap
Livewire Markets

Australia's most comprehensive markets wrap is back for 2023, with a fresh look and a new emphasis on getting you and your money ahead of the curve. Available each weekday morning at 8:30am AEDT. Written by Chris Conway, Kerry Sun, and Hans Lee.

I would like to

Only to be used for sending genuine email enquiries to the Contributor. Livewire Markets Pty Ltd reserves its right to take any legal or other appropriate action in relation to misuse of this service.

Personal Information Collection Statement
Your personal information will be passed to the Contributor and/or its authorised service provider to assist the Contributor to contact you about your investment enquiry. They are required not to use your information for any other purpose. Our privacy policy explains how we store personal information and how you may access, correct or complain about the handling of personal information.