National Australia Bank Ltd

NAB Details
Positioned to withstand the regulatory changes: National Australia Bank Ltd (ASX: NAB) reported the statutory net profit of $352 million in FY 16, which is a fall of 94.4% due to the loss on sale for both CYBG PLC (CYBG) and 80% of NAB Wealth’s life insurance business. Excluding the discontinued operations, the statutory net profit has decreased 5.6% to $6.42 billion. On the other hand, NAB has reported 4.2% growth in the cash earnings of $6,483 million in FY 16. Moreover, on a cash earnings basis, the revenue grew 2.5%.
 
 
FY 16 Financial Performance (Source: Company Reports)
 
Excluding gains in the March 2015 half year from a legal settlement and the UK Commercial Real Estate loan portfolio sale and SGA asset sales, the revenue grew approximately 3.7%, due to the higher lending balances and stronger Markets and Treasury income. Additionally, NAB is well-placed to meet the upcoming regulatory changes and is responding to the changes resulting from the Government’s Financial System Inquiry and Basel III. The bank has also issued JPY 10 billion subordinated notes due 2026. NAB stock has risen 20.61% in the last six months (as on December 30, 2016) and has a solid dividend yield. We maintain a “Buy” recommendation on the stock at the current price of – $ 31.06

 
NAB Daily Chart (Source: Thomson Reuters) 

Australia and New Zealand Banking Group Ltd

 

ANZ Details
Move to increase APRA CET1 capital ratio and focus on Asia: Australia and New Zealand Banking Group Ltd (ASX: ANZ) has agreed to sell its 20% stake in Shanghai Rural Commercial Bank (SRCB) to China COSCO Shipping Corporation Ltd and Shanghai Sino-Poland Enterprise Management Development Corporation Ltd. The agreement will see COSCO and Sino-Poland Enterprise each acquire 10% of SRCB for a total consideration to ANZ of RMB 9.2 billion (A$1,838 million). This move is expected to increase ANZ’s APRA CET1 capital ratio by about 40 basis points and the bank now aims to focus on institutional banking business in Asia. ANZ has delivered good performance in FY 16 in the core domestic franchises and has put in efforts for significant reshaping of the business. ANZ had also entered into an agreement with DBS to sell the retail and wealth businesses in Singapore, Hong Kong, China, Taiwan and Indonesia. ANZ is planning for managing the remaining businesses in the retail and wealth in Asia during FY17. The stock has risen 26.12% in the last six months (as on December 30, 2016). We maintain a “Buy” recommendation on the stock at the current price of – $ 30.94

 
ANZ Daily Chart (Source: Thomson Reuters) 

Commonwealth Bank of Australia

CBA Details
Sold stake in Visa: Commonwealth Bank of Australia (ASX: CBA) has sold its remaining shareholding in Visa Inc. for $439 million and realized a profit after tax of $278 million on sale. Moreover, CBA Group led to a one-off acceleration of amortization on certain capitalized software assets, principally related to digital and direct banking channels, totaling $275 million after tax. CBA stock has risen 13.83% in the last three months (as on December 30, 2016). On the other hand, weakening housing market, dollar fluctuations and claims might impact the performance in the coming months. We believe that the stock is trading at higher levels and give an “Expensive” recommendation at the current price of – $ 82.97

 
CBA Daily Chart (Source: Thomson Reuters) 

Westpac Banking Corp

 

WBC Details
Fall in cash earnings per share in FY 16: Westpac Banking Corp (ASX: WBC) has reported the cash earnings of $7,822 million in FY 16, which is in line with the prior year while the cash earnings per share fell 5% to 235.5 cents. Moreover, the total revenue fell 3% to $20,985 million and the net interest income grew 8% to $15,348 million. The bank faced challenges in terms of increased competition and regulatory capital changes, and economic profit and return on equity were lower than expected. We give an “Expensive” recommendation on the stock at the current price of – $ 32.95

 
WBC Daily Chart (Source: Thomson Reuters) 

MyState Ltd

 

MYS Details
Credit rating raised for the subsidiary: MyState Ltd (ASX: MYS) subsidiary MyState Bank credit rating got BBB+ rating from S&P Global Ratings (S&P) driven by their risk management practices in recent years coupled with enhanced risk profile for the bank. Furthermore, MyState Bank is equipped to manage the risks related with the bank’s continued accelerated loan growth that has reached 1.4x of the Australian banking system as a whole in FY 16. The bank also launched an enhanced internet platform and mobile banking applications. Meanwhile, MYS stock has risen 8.05% in the last three months (as on December 30, 2016), while having a solid dividend yield. Trading at an attractive P/E, we give a “Speculative Buy” recommendation on the stock at the current price of – $ 4.54

 
MYS Daily Chart (Source: Thomson Reuters) 

Suncorp Group Ltd

 

SUN Details
SUN and Nib joined hands to offer expanded health insurance range: Suncorp Group Ltd (ASX: SUN) and nib is launching a new private health insurance solutions platform in Australia through the SUN insurance and AAMI brands in Australia and the move is an extension to nib’s partnership with SUN.
 

September 2016 quarter APS330 Summary (Source: Company Reports)
 
The group expects total expenses to be flat in FY17 and FY18. Meanwhile, SUN stock has risen 11.64% in the last three months (as on December 30, 2016). We maintain a “Buy” recommendation on the stock at the current price of – $ 13.74

 
SUN Daily Chart (Source: Thomson Reuters) 

Bendigo and Adelaide Bank Ltd

 

BEN Details
Partnership with Equity Trustees: Bendigo and Adelaide Bank Ltd (ASX: BEN) entered into a strategic partnership with Equity Trustees post selling Estates business managed by Sandhurst Trustees. The group issued AUD125,000,000 subordinated floating rate notes due December 09, 2026 under BEN’s AUD7,500,000,000 Debt Instrument Program. On the other hand, BEN stock has risen 32.4% in the last six months (as on December 30, 2016), and is trading at a slightly higher level and close to its 52-week high price. We give an “Expensive” recommendation on the stock at the current price of – $ 12.93

 
BEN Daily Chart (Source: Thomson Reuters) 

Bank of Queensland Ltd

 

BOQ Details
Acquisition of Premium Funding business: Bank of Queensland Ltd (ASX: BOQ) announced for the completion of acquisition of Centrepoint Alliance Limited’s Premium Funding business for $20 million. The deal is said to be in line with BOQ’s strategy to target profitable niche business segments. BOQ stock has risen 12.1% in the last six months (as on December 30, 2016), and still has a lucrative dividend yield. We give a “Buy” recommendation on the stock at the current price of – $ 12.00

 
BOQ Daily Chart (Source: Thomson Reuters)

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