Idle thoughts.

ANZ had been a disappointment, on the system growth & returns front; that has largely changed with the last few results.

Institutional returns have lifted (an alternative to sub WACC residential returns) &, more generally on the business efficiencies front, an improvement in time to respond/approve/write-the-loan relative to a few quarters prior.

WBC finally got their cost to income ratios down (they’d been worse than the regionals, who suffer from a lack of scale!).

Whilst we are bearish on the outlook for housing, and banks are a leveraged play on the housing market, IF we squeak by without a sizeable housing induced downturn, the banks are pretty good value.

Diversification matters, we don’t have all our eggs in one basket, and an all in bet on housing weakness is a risk we don’t need to take. Thus they are solid contributors, and in particular, ANZ and WBC are solid relative value plays too, against NAB and CBA.

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