I recall how we would state that “loss rates can’t get much lower” as part of our narrative against the banks. I still think it’s the correct take, but technically, they could and did.


From the quarterly, we see a difficult quarter, with operating income down slightly, an “unfavourable” move in impairment expenses, and the result is a 9% drop in cash NPAT, which has taken the market by surprise today.

We prefer ANZ and NAB on valuation grounds. Great business, doing well, but more than fully priced, and then some.

The competitive landscape is tightening, and the key driver of residential mortgages appears “maxed out”, to our minds, with the pandemic associated pull forward in demand leading to difficult comps.

And that valuation was already far too high, let alone when you face difficult comps and a -9% q/q cash NPAT outcome.


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