Bank reporting season mostly drawing to a close domestically. Both ANZ and WBC modest beats relative to fairly bearish consensus estimates.


Lower impairments, non-existent BDD’s…

…historical NIM pressure (mix, competition, WBC’s exit rate closer to NAB’s NIM)…

…but higher rates a material positive moving forward.

Costs remain a material opportunity for WBC, and progress in today’s result (costs down 10% pcp ex one-offs) is pleasing. Much easier to expand the ROE to the sector average through cost efficiencies and improved ROA’s than it is through leverage or pricing levers, which are difficult to pull in the current environment).


We remain underweight the banks, but significantly narrowed our underweight, given this positive rates beta, with our UW mainly stemming from not holding CBA or the regionals.

CBA self-evidently outrageous compared to peers both global and domestic.


The trade is not for the very long run, as we see over-leveraged and over-extended households as highly vulnerable to rate rises, but the short-to-perhaps-a-little-less-than-medium-run outlook should be quite reasonable, as the mortgage rate repricing washes through.

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