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Nathan said that although bank shares had proven attractive to investors in recent months, that could change if the local economy deteriorated significantly. He said one reason some viewed banks as less risky than in the past is because mortgage lending has become a larger part of lending books, as opposed to business lending.
“They are a lot more defensive than they were 20 years ago – mortgage lending is a much bigger part of their book. There’s some truth to the banks being a safe haven, but at the same time, the growth outlook is more modest than it was 20 years ago.”
A principal at fund manager Alphinity, Andrew Martin, said the perception of banks as a safe haven also reflected investors’ comparisons between banks and other market sectors. Another major sector of the ASX – mining – is more exposed to the world economy and China. “Do you really want to be switching into commodities when China is under pressure or when the global economy is under pressure?” Martin said.
Atlas Funds Management chief investment officer Hugh Dive said that “relatively hot money” from overseas had flowed into Australian bank shares, and those money flows could reverse if bank results showed a jump in bad debts.
“That safe haven will be tested, and the thing people will be looking at is that bad debt charge,” he said.
New Westpac CEO Anthony Miller will deliver the bank’s results on Monday. Credit: Dominic Lorrimer
Westpac chief executive Anthony Miller will deliver his first result as chief executive of the Sydney-based bank on Monday, with analysts expecting it made $3.4 billion in profits in the six months to March.
NAB’s Andrew Irvine is tipped to unveil almost $3.5 billion in half-year profits from the country’s biggest business lender on Wednesday, while ANZ’s Shayne Elliott will deliver the bank’s half-year profits on Thursday, with $3.5 billion expected in earnings. It will be Elliott’s last result as chief executive before handing over to Nuno Matos on May 12.
Macquarie Group chief executive Shemara Wikramanayake will deliver the investment giant’s full-year results on Friday, while CBA, which reports on a different financial calendar to rivals, has a quarterly trading update on May 14.
