Morgan BellThe Great Five Australian Banks
January 18th 2007 11:27
Did you ever think of buying a bank? If you ever do, consider the five great Australian banks. You might find it hard to choose one. Stay with me for more.
The news today, 18 January 2007, is that “boom times for Australian banks could fizzle this year, according to one of the world's most prominent ratings agencies.”
“Fitch Ratings' associate director, Tim Roche, said credit stress had already begun to hit banks' balance sheets, with more credit card debt and personal loans in arrears.”
“"What you're starting to see is segments of the housing sector — which is already highly leveraged — starting to feel the interest rate increases that we saw in 2006," he said. "It's going to be more difficult for the banks to maintain the growth levels we have seen over recent years."”
“Australia's top-five banks increased operating profit after tax by 13.4 per cent last year, according to KPMG's Financial Institutions Performance Survey. Since 2003, ANZ, Commonwealth Bank, Westpac and St George have all logged steady profit growth. Of major Australian banks, only National Australia Bank has hiccupped in that time — over its $360 million foreign exchange scandal.”
“"As impaired assets pick up, they are going to have to provision more, so there's going to be more provisioning charges," Mr Roche said.”
“"They will find it more difficult to maintain volume growth, particularly in the housing lending side. It's just a number of these factors that we see as making the sector more difficult."”
“Mr Roche said the phenomenon was probably a result of the Reserve Bank's decision to increase interest rates three times over the past year, though the shift to international accounting standards muddied the numbers.”
This news was published in the online edition of The Age under the title “Clouds on horizon for Australia’s big banks” and was written by Marc Moncrief.
The five great Australian banks are all, honestly, excelent business. Were not for law stipulations they would have by now merged and become greater by international standards, more efficient and more profitable.
As it stands, and ranking the five banks by Assets rather than Capitalisation, they are: National Australia Bank (ASX: NAB) – $470,921 million - Commonwealth Bank of Australia (ASX: CBA) - $359,428 million – ANZ Banking (ASX: ANZ) - $326,607 million – Westpac Banking Corporation (ASX: WBC) - $289,267 million – and St George Bank (ASX: SGB) - $105,909 million.
The five banks Net Profit shows a similar picture of grandeur: NAB - $4,138 million – CBA - $3,928 million – ANZ - $3,661 million – WBC - $3,071 million – and SGB - $1,048 million.
If you were to buy today a share of each of these five great banks, you could ask yourself how the earnings of each of them rates to their price. The Earnings Yield (EPS/Price) are: WBC 6.88 per cent, ANZ 6.71 per cent, NAB 6.23 per cent, SGB 6.09 per cent and CBA 6.01 per cent. As it results, they are pretty close.
A measure of their value is in their P/E: CBA – 17 times – NAB and SGB – 16 times – ANZ and WBC – 15 times.
Notice though, that a bank sells by the value of its assets.
End
The news today, 18 January 2007, is that “boom times for Australian banks could fizzle this year, according to one of the world's most prominent ratings agencies.”
“Fitch Ratings' associate director, Tim Roche, said credit stress had already begun to hit banks' balance sheets, with more credit card debt and personal loans in arrears.”
“"What you're starting to see is segments of the housing sector — which is already highly leveraged — starting to feel the interest rate increases that we saw in 2006," he said. "It's going to be more difficult for the banks to maintain the growth levels we have seen over recent years."”
“Australia's top-five banks increased operating profit after tax by 13.4 per cent last year, according to KPMG's Financial Institutions Performance Survey. Since 2003, ANZ, Commonwealth Bank, Westpac and St George have all logged steady profit growth. Of major Australian banks, only National Australia Bank has hiccupped in that time — over its $360 million foreign exchange scandal.”
“"As impaired assets pick up, they are going to have to provision more, so there's going to be more provisioning charges," Mr Roche said.”
“"They will find it more difficult to maintain volume growth, particularly in the housing lending side. It's just a number of these factors that we see as making the sector more difficult."”
“Mr Roche said the phenomenon was probably a result of the Reserve Bank's decision to increase interest rates three times over the past year, though the shift to international accounting standards muddied the numbers.”
This news was published in the online edition of The Age under the title “Clouds on horizon for Australia’s big banks” and was written by Marc Moncrief.
The five great Australian banks are all, honestly, excelent business. Were not for law stipulations they would have by now merged and become greater by international standards, more efficient and more profitable.
As it stands, and ranking the five banks by Assets rather than Capitalisation, they are: National Australia Bank (ASX: NAB) – $470,921 million - Commonwealth Bank of Australia (ASX: CBA) - $359,428 million – ANZ Banking (ASX: ANZ) - $326,607 million – Westpac Banking Corporation (ASX: WBC) - $289,267 million – and St George Bank (ASX: SGB) - $105,909 million.
The five banks Net Profit shows a similar picture of grandeur: NAB - $4,138 million – CBA - $3,928 million – ANZ - $3,661 million – WBC - $3,071 million – and SGB - $1,048 million.
If you were to buy today a share of each of these five great banks, you could ask yourself how the earnings of each of them rates to their price. The Earnings Yield (EPS/Price) are: WBC 6.88 per cent, ANZ 6.71 per cent, NAB 6.23 per cent, SGB 6.09 per cent and CBA 6.01 per cent. As it results, they are pretty close.
A measure of their value is in their P/E: CBA – 17 times – NAB and SGB – 16 times – ANZ and WBC – 15 times.
Notice though, that a bank sells by the value of its assets.
End
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