Via Banking Day:
Revenue trends among the big banks reporting their half-year results over the coming week will be weak, according to one analyst’s preview of the results. And NAB will cut its dividend.
Macquarie Securities expects all three of the banks – ANZ, NAB and Westpac – to report lower net interest income and non-interest income.
This weak revenue growth is due to soft non-interest income in areas such as markets and a combination of slow growth and margin pressure in their mortgage businesses.
Mortgage balances are growing at a little over 4 per cent a year, their lowest rate of growth for many years. ANZ lost share during the March half.
Funding costs are coming down but Macquarie says the impact of lower spreads will only start to come through in the second half.
Remediation charges are expected to be an ongoing drag on profits. “While banks, except ANZ, have pre-announced large remediation provisions, we expect further charges in the September half and in 2019/20,” Macquarie says.
There is also a chance that banks will increase their impairment charges to make allowance for more challenging economic conditions.
No mistaking that trend. That said, I can actually see banks rising in the short term on hopes springing from rate cuts beginning in June.
But no, I would not buy them!