.JPG)
Australia and New Zealand Banking Group Ltd
Selling stake in Metropolitan Bank & Trust Company:Australia and New Zealand Banking Group Ltd (ASX: ANZ) made an agreement with their joint venture partner Metropolitan Bank & Trust Company for selling their 40% stake in the Philippines based Metrobank Card Corporation (MCC). The bank is selling the stake for A$184 million. Further, ANZ has entered into a put option to sell their rest of the 20% stake to Metrobank, which is exercisable in the fourth quarter of FY18 and would deliver a total sale price of A$368 million. This sale represents an implied P/B multiple of 4.4x while the bank would get a post-tax gain of over A$245 million while enhancing their APRA CET1 capital ratio by 9 basis points in FY18. ANZ has also sold its OnePath pensions and investments (OnePath P&I) and aligned dealer groups (ADG) business to IOOF Holdings for $975 million, with an intent to focus on its core business. Meanwhile, ANZ’s Chairman, John Judge will be retiring from its Board of Directors in January 2018 and former New Zealand Prime Minister the Rt Hon Sir John Key will become the new Chairman. We maintain a “Buy” recommendation on the stock at the current price of $ 30.60
National Australia Bank Ltd
Controlling bad and doubtful debt charges: National Australia Bank Ltd (ASX: NAB) controlled their bad and doubtful debt charges (B&DDs) by 12% to $173 million as of the third quarter of 2017 showing their improving asset quality trends and non-repeat of the collective provision overlay for commercial real estate raised in the March 2017 half year. The group’s Common Equity Tier 1 (CET1) ratio fell to 9.7% as of June 2017, against 10.1% as at March 2017. The group sold their non-core assets to attain a much leaner and more efficient banking structure. NAB stock recovered over 10.1% in the last three months (as of October 18, 2017) and is moving towards its high level. We give a “Hold” on the stock at the current price of $ 32.38
.png)
Controlling bad and doubtful debt charges (Source: Company reports)
Bendigo and Adelaide Bank Ltd
Decent performance:Bendigo and Adelaide Bank Ltd (ASX: BEN) is offering new Converting Preference Shares (“CPS4”), which are expected to be quoted on the Australian Securities Exchange and trade under the ASX code “BENPG”. The group is aiming to raise over $300 million through the offer of CPS4. The bank has also given an exchange notice to redeem its current CPS on 13 December 2017 which is trading on the ASX under the code “BENPD”. For the 12 months ending 30 June 2017, the group’s after tax statutory profit rose to $429.6 million against $415.6 million in the prior corresponding period. Underlying cash earnings rose 4.2% yoy to $418.3 million for FY17 while the group retained a final fully franked dividend of 34 cents per share, with a 1.5% discount for shares issued under both the Dividend Reinvestment Plan and Bonus Share Scheme. On the other hand, Moody’s had downgraded the bank’s long-term credit rating by one notch to A3/Stable and the short-term rating by one notch to P-2. Looking at the challenges in the banking sector, we give an “Expensive” recommendation on the stock at the current price of $ 11.87
Bank of Queensland Ltd
Ongoing consumer focus: Bank of Queensland Ltd (ASX: BOQ) continues to focus on niche customer segments while the bank has been delivering a solid growth via BOQ Specialist, BOQ Finance and their target niche commercial segments. The group continued to expand their presence in the broker market which has contributed to their Virgin Money business exceeding growth expectations in the home loan portfolio. The group delivered profits for the fifth successive year wherein cash earnings after tax rose 5% to $378 million in FY17 while statutory profit after tax surged 4% to $352 million. BOQ stock moved up 1.8% on October 19, 2017 with overall sector driven sentiments. Given the high un-up in the stock, we give a “Hold” on the stock at the current price of $ 13.51
.png)
Loan Impairment Expense (Source: Company Reports)
MyState Ltd
Stable outlook on credit rating:MyState Ltd (ASX: MYS) has recently pointed out various challenges regarding regulatory burden on smaller banks and has requested the government for some mandate within Australia’s regulatory framework to promote competition. The group recently received an investment grade rating of ‘Baa1/P2’ (long term/short term) from Moody’s with a stable outlook. Moody’s sees the bank’s Baa1 rating supported by its very strong asset quality and conservative underwriting. They also see the bank’s geographic diversification of the loan portfolio and forecasts that the bank’s capital would remain at healthy levels. We give a “Hold” on the stock at the current price of $ 4.90
Commonwealth Bank of Australia
Facing allegations over breach of anti-money laundering laws: Commonwealth Bank of Australia (ASX: CBA) is making a strategic review of its global asset management business, Colonial First State Global Asset Management also known outside of Australia as First State Investments (“FSI”). CFSGAM has A$219 billion in Assets Under Management (“AUM”), while the strategic review from CBA would consider several options, including an IPO. On the other hand, the bank is facing class action, filed by law firm Maurice Blackburn and litigation funder IMF Bentham in the Federal Court in Melbourne. They made allegations of serious and systemic non-compliance of anti-money laundering laws involving thousands of transactions. Given the pressure on the bank at the back of recent sentiments and the trading scenario, we give an “Expensive” recommendation at the current price of $ 78.74
Westpac Banking Corp
Earnings to be impacted by refund offered to packaged customers: Westpac Banking Corp (ASX: WBC) is offering refunds (of about $65 million) to some of its customers holding ‘packaged’ accounts after identifying that some customers did not automatically get benefits to which they were entitled. The issue has impacted over 200,000 customers who held Premier Advantage Packages with Westpac or Advantage Packages with St. George, BankSA, or Bank of Melbourne from 2010. Primarily, these customers did not get discounts on ancillary products like home and contents insurance and term deposits. This is said to have an after-tax impact of $45 million on FY17 earnings. However, the stock moved up about 0.5% on October 19, 2017 with this announcement. We rate the stock “Expensive” at the current price of $ 33.45
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.