Banks
Some interesting slides in the BEN result update.
Firstly, NIM’s were hammered, which is likely a key reason for the stocks fairly dismal trading today.
However, they also showed the monthly NIM evolution, and the exit rate, which is markedly better, and, as expected, tracks the cash rate movements.
CBA have suggested something like 4-bps of NIM per 25bp rate hikes. So 8 hikes might be the better part of 30-40bps on the NIM, which is quite enormous as a margin driver.
BEN are suggesting 46bps worth of NIM expansion, based on market implied rates.
Now the market hasn’t rewarded the banks given falling NIMs, even though bad and doubtful debt charges have been extremely low, in some cases actually negative, as prior loan loss provisioning was written back.
Will the market be more favourably inclined towards the banks as NIM’s rise, but bad and doubtful debt charges normalise?
Or will they remain out of favour in either?
Important Information: This document has been prepared by Aequitas Investment Partners ABN 92 644 165 266 (“Aequitas”, “our”, “we”), a Corporate Authorised Representative (no. 1284389) of C2 Financial Services, (Australian Financial Services Licensee no. 502171), and is for distribution within Australia to wholesale clients and financial advisers only.
This document is based on information available at the time of publishing, information which we believe is correct and any opinions, conclusions or forecasts are reasonably held or made as at the time of its compilation, but no warranty is made as to its accuracy, reliability or completeness. To the extent permitted by law, neither Aequitas nor any of its affiliates accept liability to any person for loss or damage arising from the use of the information herein.
Please note that past performance is not a reliable indicator of future performance.
General Advice Warning: This document has been prepared without taking into account your objectives, financial situation or needs, and therefore you should consider its appropriateness, having regard to your objectives, financial situation and needs. Before making any decision about whether to acquire a financial product, you should obtain and read the relevant Product Disclosure Statement (PDS) or Investor Directed Portfolio Service Guide (IDPS Guide) and consider talking to a financial adviser.
Taxation warning: Any taxation considerations are general and based on present taxation laws and may be subject to change. Aequitas is not a registered tax (financial) adviser under the Tax Agent Services Act 2009 and investors should seek tax advice from a registered tax agent or a registered tax (financial) adviser if they intend to rely on this information to satisfy the liabilities or obligations or claim entitlements that arise, or could arise, under a taxation law.