In today’s daily we have covered stock research on Westpac (HOLD). 











 
The S&P 500 was up by 37.24points or 1.96 %on Tuesday to 1941.25 points. U.S. stocks jumped on Tuesday following upbeat earnings and a report that the European Central Bank was looking at buying corporate bonds. The ECB entered the 2.6 trillion-euro ($3.3 trillion) covered bond market after President Mario Draghi unveiled plans last month to bolster companies’ and households’ access to financing. The ECB bought Italian covered bonds as it returned to the market for a second day under its asset purchase program.

The FTSE Eurofirst 300 climbed 2.1% taking the index back above where it ended a week ago before a two day sell off drove it down as much as 6% while the main Italian and Spanish stock indices climbed 2.8% and 2.4% respectively. Wall Street continued its recovery with Apple gaining ground after its quarterly and earnings easily beat Analysts’ forecasts and other tech stocks also benefiting from positive results. 



S&P 500 Daily Chart (Source – Thomson Reuters)
S&P ASX 200was up by 5.6 points or 0.11%on Tuesday and closed at 5325.0 points. Chinese GDP grew at an annualised rate of 7.3 per cent in the third quarter, which was down from the ­previous quarter’s 7.5 per cent rise, but still above market expectations of a 7.2 per cent rise. Newcrest Mining stock fell 3¢ to $9.78 after the miner announced it would keep its guidance for the full-year unchanged. Newcrest reported a 12 per cent fall in gold production for the September quarter due to lower grades of the precious metal and planned plant shut-downs.

Veda Group was one of the market’s worst performers, diving 15¢ to $2.17 on news that its private equity shareholder has abandoned a planned sale of its stake. Among the miners, Rio rose 0.4 per cent to $59.97, BHP fell 9¢, or 0.3 per cent, to $33.75 and Fortescue rose 9¢ to $3.55. The Australian dollar is trading at US87.80¢, compared with US88.18¢ at Tuesday’s local close.  Iron ore was up 0.3 per cent to $US81.83 a tonne. SPI futures are up 55 points. The following stocks will trade ex-dividend today: ICSGlobal, Ridley Corp. Downer EDI was the best performing stock, to view the video on Downer EDI Click Below.



Downer EDI Video
 

Downer EDI Daily Chart (Source – Thomson Reuters)
 
Top Performers on the ASX 200 were :-




 
 
Stock of the Day - Westpac Banking Corporation (HOLD)

Westpac Banking Corporation (WBC), one of the leading banking and financial services’ provider, has reported a high quality and consistent performance for 1H14. On May 2014, the Group announced its statutory net profit for the six months to 31 March 2014 of $3,622 million, which rose 10% from that corresponding to the period of six months to 31 March 2013. The cash earnings per share were 7% up to 121.3 cents.



Performance Highlights (Source – Company Reports)

The Group has reflected a strong balance sheet with improvement in growth in its targeted areas and an upsurge in operating momentum in all divisions while delivering value for customers and shareholders. We also note that there appears to be a consistent growth in core business and cash earnings. The acquisition of Lloyds’ selected businesses has turned out to be a favorable one for WBC with the addition of $20m to Cash Earnings in first 3 months.

The Group’s relationship approach appears to be unswerving with regards to growth in customer related markets income. WBC also reported that its treasury income in 1H14 rose from that of 2H13, though the same was lower than that of 1H13.


Dividends in Cents per Share (Source – Company Reports)
 
The markets risk income was higher from FX & CCE1 and Debt market. Further, the Group noted that foreign exchange movements were not a major contributor to earnings in 1H14. Moreover, the growth in 1H14 did not get a boost from the infrequent and volatile items.

From funding standpoint, the Group could continue to fund loan growth with the help of stable funding sources including, but not limited to, funded Lloyds acquisition ($8bn), growth in trade ($3bn) and other lending ($17bn). In view of the funding, the Group now plans to meet Liquidity Coverage Ratio requirements.

WBC appears to have healthy contributions from all of its Divisions. The Group aims to execute as per its strategic priorities to have more growth.


Divisional Contributions – Cash Earnings $m (Source – Company Reports)

As part of significant progress during the 1H14, the Group launched a new Australian online banking platform, new contactless payments functionality for Samsung Galaxy and Note devices, and the first stage of the BT Panorama investment platform. WBC aims to come-up with additional online and mobile solutions in order to streamline finances for business and retail customers. Further, WBC is on track with regards to the transformation of the branch network with a further 17 Westpac Bank Now and 54 St.George FreshStart branches opened/upgraded. Its video technology interface through Westpac’s Connect Now and St.George’s Business Connect are gradually rolling out. The Smart ATMs service further adds to WBC’s performance.

The Group has been able to receive General Derivatives Licences for Westpac’s Shanghai and Beijing branches with respect to its Asian Strategy. WBC aims to leverage through Chinese growth that remains a positive for Australia. Further, the Group believes that there exists a strong economic picture in New Zealand. Also, it is certain of the fact that Australian housing market fundamentals appear to be sound and healthy for its growth.

The Group witnessed improvement in portfolio quality across all major sectors. It further emphasized on delivering more functionality for customers through digital platform. The below illustration showcases the extent of WBC’s deeper customer relationships in comparison to its peers.


Wealth Penetration (Source – Company Reports)

In January 2014, the Group has been named as the World’s Most Sustainable Company by the Global 100 at the Davos World Economic Forum. The Group also reported about its complete harmonization with the Basel III common equity tier 1 capital ratio under BCBS with 11.26% figure.


Strength, Return & Productivity (Source – Company Reports)

The Group has an unmatchable cost-to-income ratio, and probably, the lowest loan write-off experience of the major banks.


1H14 Divisional Performance Highlights Operating Momentum (Source – Company Reports)

In view of WBC’s expectations for 2H14, we note that the Group believes to achieve higher growth trend, actively manage margins, improve productivity to offset business expenses, expand returns from supporting customers’ wealth/insurance needs, achieve and maintain a strong asset quality picture, and have prodigious momentum in all its divisions.


Service Revolution for Customers (Source – Company Reports)

It is expected that WBC may be able to have improved capital management over the medium term, in view of the reported and anticipated ROE. The growth in corporate and specialized lending may expand. Then the APRA’s change in debt treatment issued by Wealth Management divisions of few banks may not adversely affect WBC. In view of a sticky customer base, healthy balance sheet and a probability to have an enriched thrust in future, we put a HOLD recommendation for this stock at the current price of $33.41.

 






 

Disclaimer
The advice given by Kalkine Pty Ltd and provided on this website is general information only and it does not take into account your investment objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people.
Kalkine.com.au and associated pages are published by Kalkine Pty Ltd ABN 34 154 808 312 (Australian Financial Services License Number 425376).
The information on this website has been prepared from a wide variety of sources, which Kalkine Pty Ltd, to the best of its knowledge and belief, considers accurate. You should make your own enquiries about any investments and we strongly suggest you seek advice before acting upon any recommendation.
Kalkine Pty Ltd has made every effort to ensure the reliability of information contained in its newsletters and websites. All information represents our views at the date of publication and may change without notice. To the extent permitted by law, Kalkine Pty Ltd excludes all liability for any loss or damage arising from the use of this website and any information published (including any indirect or consequential loss, any data loss or data corruption). If the law prohibits this exclusion, Kalkine Pty Ltd hereby limits its liability, to the extent permitted by law to the resupply of services. There may be a product disclosure statement or other offer document for the securities and financial products we write about in Kalkine Reports. You should obtain a copy of the product disclosure statement or offer document before making any decision about whether to acquire the security or product.
The link to our Terms & Conditions has been provided please go through them and also have a read of the Financial Services Guide.