Sell side previews bank results

Wednesday 27 April 2016

From Deutsche:

Expecting sound UL earnings growth offset by bad debt deterioration

Overall we expect a mixed 1H16 reporting season, with hoh cash NPAT growth of ~1% -4%. Underlying earnings growth is likely to be solid (3-8%), however we forecast BDD/GLA ratios to rise ~4bps on avg (due to single name exposures and resources). Lending growth should be solid across most businesses, however widening Bills/OIS spreads and Institutional lending pressures should partly offset mortgage repricing benefits (leaving net interest margins up 1bp on avg). We expect non-resources asset quality to remain resilient, however investors are likely to focus on any commentary the banks can provide on provisioning for single names.

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About the author

David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific's leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.