Interesting to note the data given the recent WBC result and subsequent sell off. Here’s one measure of credit quality, in which you can eyeball a fairly clear divergence to others.


It is perhaps less dramatic on the total committed exposure measure, but still moving higher against peers flat-to-lower.


WBC’s expenses growth was markedly above expectations, at the result, and suggests yet another difference to peers in terms of how they are managing costs across the company.


So what’s the point? Well, whilst the banks are pretty highly correlated, yet there is a degree of heterogeneity in the operational results, that can and should be felt in share price levels and rates of change.


If one bank is pushing their dividends too hard, or writing loans that are a little too risky, or failing to reign in costs sufficiently tightly, then the odds of underperforming the market are higher.

Now data consistency and comparability is often problematic in these types of analysis (being certain things are exactly like-for-like) and sufficiently comparable over the time periods considered.

As such it is much more about longer run trends, for the valuation context.

Here, it would appear that the WBC sell-off is fair, and doesn’t represent a cracking Value based opportunity.

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