We're more focused on loan pricing and the impact on Westpac which will be the biggest loser in an all out price war on Australian residential mortgages. As a completely domestic lending, residential home-loans represent a greater proportion of Westpac's earnings when compared to its peers. Net interest margins fell 2 basis points to 2.14% when compared to last year but this is still a very good number. There is scope for downside in Australia - perhaps sub 2% - and we think 2013 has so far been a low competition environment, regardless of what bank bosses say. The market will like this result because it is clean and doesn't contain any nasties but with Westpac trading on a price to earnings ratio of around 15x this number - we're a little cautious on where margins are going next year. (VIEW LINK)
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Link to a video review on the result and also an overview of the banking sector http://youtu.be/piEO0Es52VE