Commonwealth Bank of Australia

Regulatory Updates: Commonwealth Bank of Australia (ASX: CBA) experienced a bit volatility into the stock price on May 21, 2018 after the media reported about tight examination over its handling of SME loans which were picked up in 2008 acquisition of BankWest. Primarily, Royal Commission is said to have dismissed claims that CBA aimed to systematically default loans following its purchase of BankWest a decade ago. Besides this, the group agreed on the in-principle settlement with the Australian Securities and Investments Commission (ASIC) to settle the legal proceedings in relation to claims of manipulation of the Bank Bill Swap Rate (BBSW). Further, the group disclosed to ASX that few directors of the company (i.e., Mary Louise Padbury, Robert John Whitfield, and Anne Louise Templeman-Jones), having a direct interest in the Group recently acquired fully paid ordinary shares via on-market trade, as at 11 May 2018. Looking at the 12.54% fall in stock price in the last six months with a caution on challenges from Royal commission, we maintain our “Expensive” recommendation on the stock at the current market price of $ 70.09.


Operating Momentum Continues (Source: Company Reports)
 

Westpac Banking Corporation

Distribution Updates: With Royal Commission into the sector, Westpac Banking Corp’s (ASX: WBC) stock has been under attack by many investors. WBC stock edged down by 0.7% on May 21, 2018 while the bank also notified about the distribution of an interim dividend of Incitec Pivot Limited (IPL). The payment date is on or about July 02, 2018 while ex-distribution/entitlement date is May 22, 2018. WBC is as issuer of Self-Funding Instalments (“SFI”) over securities in Incitec Pivot Limited (IPL). Meanwhile, the Group has appointed Carolyn McCann to the new position of Group Executive, Customer & Corporate Relations, effective from June 18, 2018. Currently, he is holding the position of Westpac’s General Manager, Corporate Affairs and Sustainability. Moreover, the company disclosed to the market that one of its Director Nerida Frances Caesar had an indirect interest in the company and acquired 9,985 fully paid ordinary shares through on-market trade. However, the group delivered a decent performance across the business during first half of the year wherein Net Profit after tax increased by 7% to $4,198 Mn in 1HFY18 as compared to prior corresponding period. The Group also maintained the strength of its balance sheet with CET1 capital ratio of 10.5% which is in line with the benchmark set by Australian Prudential Regulation Authority (APRA). Meanwhile, the stock has fallen 9.33% in past six months and further down by 3.90% in last five days as on May 18, 2018. We maintain our “Expensive” recommendation on the stock at the current price of $ 28.66.

 
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