There was a lot to like in the ANZ result, not the least of which was meeting guidance, unlike NAB.

Here’s ANZ

Vs NAB. King Charles, oddly enough, has a nice cameo amidst the data below. But the point is, ANZ meets , NAB misses.

This is pretty instructive, to us.

NAB stepped back from the market, but still suffered NIM reductions over the quarter. ANZ didn’t step back from the market, and had the similar NIM impact.

Thus things worked out better for ANZ, and that was most of the impact.

ANZ is still carrying additional capital pertaining to the SUN bank acquisition. We cannot see how the regulator could reject it, given a) ANZ share would only return to the level of a few years ago b) loans are being written industry wide below the cost of capital, as a good indicator of how ferocious and indeed unhealthy the competition is c) that the US has shown us the dangers of subscale banks in context of deposit flight and too big to fail (thus ANZ taking SUN could arguably increase financial stability) and d) the regulator cannot lock SUN into a permanently sub-WACC outcome just because it wants to.

Still, the regulator doesn’t listen to us, but there you have it.

From our perspective, CBA is overvalued, NAB somewhat overvalued, ANZ quite cheap, and, deep down, the market will probably like it either way if it gets/fails to get SUN, preferring certainty over uncertainty, and WBC somewhat the wild card, out on Monday, but with the huge optionality of getting that bloated cost base down.

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