Three of Australia’s four largest banks are set to post second-half profits that match or exceed earnings before the global financial crisis as bad debts ease in an economy benefiting from the biggest mining boom in a century.
Net income at Australia & New Zealand Banking Group Ltd. rose 66 percent to a record A$2.53 billion ($2.5 billion) in the six months through Sept. 30 from a year earlier, according to the median estimate of seven analysts surveyed by Bloomberg. National Australia Bank Ltd. returned to profit and Westpac Banking Corp. may post its best-ever second-half result, analysts forecast.
The results “will likely show solid” growth, said Jonathan Mott, a banking analyst at UBS AG in Sydney. “Unfortunately for the banks, they have less direct exposure to the resources and mining services boom and substantial exposure to the domestic economy, which remains patchy and more rate sensitive.”
Australian lenders, having remained profitable through the global credit squeeze, now face waning demand for loans among households and businesses and increased funding costs. Chief Executive Officers at Westpac, ANZ Bank and Commonwealth Bank of Australia said this month that mortgage rates will need to rise to cover the increased cost of raising capital to fund loans.
The six-member S&P/ASX 200 banks index has dropped 7.3 percent this year, underperforming the benchmark S&P/ASX 200 Index, which has lost 4.6 percent. Shares of ANZ Bank climbed 2.3 percent this year, compared with a 10.7 percent slump for National Australia and Westpac’s 11.3 percent decline.
UBS has a “buy” rating on shares of ANZ Bank and is “neutral” on Westpac and National Australia Bank.
Rate Rises
Australian mortgage lending growth rose 8.1 percent in August from a year earlier, the weakest pace in 10 months, the Reserve Bank of Australia said last month. Business lending slumped 4 percent from a year earlier.
Demand for borrowing cooled after central bank Governor Glenn Stevens led Group of 20 policy makers by boosting borrowing costs in six quarter-percentage point steps between October 2009 and May to 4.5 percent. The bank said last week that its decision to keep the rate unchanged this month was “finely balanced.”
National Australia, led by CEO Cameron Clyne, will report second-half net income of A$2.37 billion, compared with a loss of A$75 million a year earlier when charges for bad debts surged, according to the median estimate of seven analysts. That will be the lender’s largest second-half profit in three years.
Cash earnings at Westpac, which has the nation’s largest branch network after its purchase of St. George Bank Ltd., climbed 24 percent to A$2.9 billion in the six months to Sept. 30, according to the median of seven analyst estimates.
National Australia is due to release results on Oct. 27, ANZ Bank on Oct. 28 and Westpac on Nov. 3. Commonwealth Bank, the nation’s biggest lender, is scheduled to release its September quarter trading update on Nov. 15.
No comments:
Post a Comment