Australia's Big Four Banks First-Half Profits To Hit A$12.6 Billion - Analyst
April 25 2012 - 8:06PM
Dow Jones News
Australia's banks are set to report higher first-half profits
next month but analysts expect subdued lending growth to drive more
interest rate rises this year.
Combined profits of the four major banks are expected to be
around 12.6 billion Australian dollars (US$13.05 billion),
according to a note by Macquarie Group analyst Michael Wiblin
released Thursday, beating the A$12 billion reaped in the first
half of 2011.
Westpac Banking Corp. (WBC.AU) is expected to report a cash
profit of A$3.198 billion, up 0.9% from a year earlier. Australia
and New Zealand Banking Group Ltd. (ANZ.AU) is expected to post a
5.2% rise in cash profit to A$2.694 billion and National Australia
Bank Ltd. (NAB.AU) a 4% increase to A$2.776 billion, he said.
In February, Commonwealth Bank of Australia (CBA.AU),
Australia's biggest bank by market capitalization, beat analyst
expectations to report a 19% rise in net profit for the six months
to Dec. 31 to A$3.62 billion, up from A$3.05 billion a year
earlier.
Macquarie's forecasts echo similar predicts from JP Morgan
analysts earlier this month and reflect a broad consensus among
commentators that Australia's big four banks have managed to stay
profitable in recent months, despite higher funding costs and
slowing domestic credit growth.
Yet Wiblin noted that the "outlook for the sector remains
subdued" and predicted that the banks would raise their interest
rates again independently from the Reserve Bank of Australia to
compensate for weak mortgage demand, thereby increasing "the risks
to softer loan growth."
Earlier this month ANZ, for the second time this year, raised
its home loan rates independently of the RBA. The other big four
banks haven't yet followed suit but analysts expect more rate rises
by the middle of the year.
UBS analyst Jonathan Mott said in another note to clients that
the changing environment pointed to a fundamental shift in the
profile of Australia's banks.
"The banks [will] revert to low growth, profitable companies
producing strong dividends," he said. "This should continue so long
as Australia can achieve an 'orderly' deleveraging process."
-By Caroline Henshaw, Dow Jones Newswires; 61-2-8272-4680;
caroline.henshaw@dowjones.com
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