The pattern of the bank reporting season over the past few years has been for the CEOs to somewhat apologetically announce their billions of dollars of fat and growing profits, after which the analyst community shakes its collective head, warns that the outlook isn’t as good as the recent past and talks down the share prices.
And those post-result falls have tended to be good buying opportunities for investors more interested in sustained total returns than immediate share price gyrations.
It’s happened again this week, but with one difference: this time the analysts have been proven right – the profit (and dividend) growth shareholders have been used to wasn’t really there for NAB and ANZ. After all the crying “wolf!” about the impact of a competitive, slower-growth, regulator-impacted environment, there was finally a lupine howl to be heard among the bushes.
NAB and ANZ posted their results this week. Yet the seasonal dip in the banks’ share price still looks more like a buying opportunity than a disaster.Yet the seasonal dip in the banks’ share price still looks more like a buying opportunity than a disaster. The wolf has long since been priced in. Because of that, bank dividends only have to be maintained to represent out-performance within a portfolio.
“The wolf has been priced in.” So long as the wolf is only regulatory action. What about the Tyrannosaurus Rex charging in behind them in the form of the looming recession? The banks have run down their bad debt provisions to next-to-nothing and have globally inflated payout ratios. If that’s not a dividend at risk from economic weakness then I’ve never seen one.
I am fighting the schadenfreude of watching the evisceration of the Pascometer super fund largely by feeling very sorry for his readers.
