Stocks’ Details

Bank of Queensland

1Q19 Pillar 3 report:Bank of Queensland (ASX: BOQ), an Australia’s leading bank, provides all kinds of personal and business services.Recently, the bank has disclosed its distribution payment of AUD 1.00390000 with dividend distribution rate of 1.9400 % per annum for BOQPE - CAP NOTE 3-BBSW+3.75% PERP NON-CUM RED T-08-24 which will be paid on 15 February 2019.The bank has recently announced its Basel III Pillar 3 report for the quarter ended 30 November 2018 in which it reportedCET 1 Capital Ratio of 9.1%, a Total Capital Ratio of 12.6% and Liquidity Coverage Ratio of 132.0%.

Basel III Pillar 3 highlights (Source: Company Reports)

During FY18,the bank reported a net interest margin of 1.98% which is above the industry median of 1.94% showing that the bank has made a wise investment decision in comparison to its peers. It reported a TTM P/B multiple of 1.1x as compared to the banking service industry median of 1.3x showing thatthe bank is undervalued. Further, it reported a higher dividend yield of 7.3% as compared to the banking service industry median of 6.4% representingmore income for its shareholders.

The stock has generated a positive yield of 7.39% over the past three months showing the stock to be in an uptrend. With the decent Pillar 3 report, wise investment decisions, lower than industry P/B multiple, higher dividend yield, and the stock in an uptrend, we maintain our “Buy” recommendation on the stock at the current market price of $10.650 (up 1.816% on 7 February 2019).

 

CYBG PLC

Narrowed FY19 guidance for NIM:CYBG PLC (ASX: CYB) a UK-based leading bank, provides all kinds of personal and business services through Clydesdale Bank, Yorkshire Bank and Virgin Money. In its 1Q19 updates, it reported a NIM of 172 bps (3 months annualised) and narrowed FY19 guidance for NIM to 165 bps to 170 bps on account of sustained pricing pressure in the UK mortgage market. CET 1 ratio was reported at 14.5%. For FY19, the group remained on track to deliver cost target of less than £950 million.

Customer balances (Source: Company Reports)

During 1Q19,it witnessed a growth of 1.5% over the previous quarter in mortgages which was reported at £60.0 billionon account of strong mortgage pipeline along with a focus on customer retention. It also witnessed a SME growth of 1.2% over the previous quarter on account of strong demand from its customers, reported at £7.6 billion. It now expects to deliver a minimum of £150 million of annual net run-rate cost synergies by the end of FY21vs £120 million previously announced because of the confirmed initial synergy plan assumption.It reported a TTM P/B multiple of 0.5x as compared to the banking service industry median of 0.9x showing thatthe bank is undervalued.

The stock has generated a negative yield of 32.70% over the past three months. With a strong CET 1 ratio, growth in mortgage and SME sector, on track cost targets along with increasing annual net run-rate cost synergies, and lower P/B multiple, we have a ‘wait and watch’ stance on the stock at the current market price of $3.760 (up by 17.868% on 7 February 2019) to get a better entry level.
 

MyState Limited

Moody’s rating of Baa1/P2 with a stable outlook:MyState Limited (ASX: MYS) is an Australia-based financial group. Recently, Mr Robert L Gordon acquired 5,000 ordinary shares for A$21,732.44 via on-market purchase. He holds 25,387 ordinary shares now. Moody’s gave a credit rating of Baa1/P2 with a stable outlook. Accounting standard AASB 9 is expected to be implemented by the group in FY19 which might increase the provisions.


FY18 Financial highlights (Source: Company Reports)

During FY18, it reported a strong Tier 1 Risk-Adjusted Capital ratio of 11.51%. The group reported a major improvement in operating leverage which was reported at 2.9% in FY18 as compared to -0.3% in FY17. It reported a TTM P/B multiple of 1.3x as compared to the financial industry median of 1.1x showing thatthe group is trading slightly at a premium valuation at this price. Moreover, it reported a higher dividend yield of 6.3% as compared to the banking service industry median of 5.4% representingmore income for its shareholders.

The stock has generated a positive yield of 5.09% over the past three months. The relative strength index along with the Bollinger bands are visible in a negative territory. With a strong CET 1 ratio, stable outlook by Moody’s, improvement in operating leverage along with higher dividend yield, we have a ‘hold’ stance on the stock at the current market price of $4.720 (down by 0.632% on 7 February 2019).

Australia and New Zealand Banking Group Limited

Reviewing the recommendationproposed by The Royal Commission: Australia and New Zealand Banking Group Limited (ASX: ANZ) provides various banking and financial products and services.It has disclosed that it is reviewing the recent 76 recommendation which has been proposed by The Royal Commission. The bank has planned to demerge IOOF Holdings Limited, Zurich Financial Services Australia, Retail, Commercial and SME banking business in PNG region, and 55% stake in Cambodia JV ANZ Royal Bank in FY19. As per its 18 December 2017 buyback scheme, 86,362,047 shares have been bought back till 06 February 2019.


FY18 Group Performance (Source: Company Reports)

During FY18, the Tier 1 Risk-Adjusted Capital Ratio was reported at 13.40% was reported above the industry median of 11.13% showing thatthe bank's financial health is improving. The bank reported a higher dividend yield of 6.2% as compared to the industry median of 5.8%generating more income for its shareholders.  Moreover, it reported a TTM P/B multiple of 1.3x as compared to the banking service industry average of 3.6x showing thatthe group is trading slightly at a discount at this price.

During the last month, the stock has generated a positive yield of 7.40%. With a strong CET 1 ratio, lower than industry P/B multiple, higher than industry dividend yield, and Demerger plans for FY19, we maintain our ‘buy’ recommendation on the stock at the current market price of $26.860 (up by 1.704% on 7 February 2019).


Stock Price Comparative Chart (Source: Thomson Reuters)  
 
 

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. On the date of publishing this report (mentioned on the website), employees and/or associates of Kalkine Pty Ltd do not hold positions in any of the stocks covered on the website. These stocks can change any time and readers of the reports should not consider these stocks as advice or recommendations.