Over the last week or so, three of the four major banks have reported their half year profit results. Dominated by the provision each bank made for the Covid-19 pandemic and dividend deferrals, the results overall were underwhelming. They highlighted the ongoing pressures banks face – flat to falling volumes, flat to falling margins, pressure on non-interest income, additional compliance and risk management costs and now due to COVID-19, a material blow out in bad debts.
When I reviewed these banks exactly 6 months ago, I nominated Westpac “by a nose” as my pick, noting that there was little to choose between them. For bank shareholders, it has turned out to be a very disappointing period. Including dividends, Westpac has lost 40.5% over this period, with NAB and ANZ only marginally better at -39.6% and -37.0% respectively. In a relative sense, Commonwealth Bank (which next reports in August) outperformed, keeping its loss to 22.2%.
So is Westpac still my pick? And what do the major brokers say? Who is their top pick? Here is an analysis of the three major bank reports and insights from the major brokers. First, let’s look at their performance over a number of key attributes.