Via UBS. (Click to enlarge)
Or to put it another way…. the market cap of the Aussie banking sector (effectively four commercial banks – ANZ, CBA, NAB, and Westpac – along with investment bank Macquarie) has now reached US$305bn, for which you could get: US Bancorp; Goldman Sachs; Standard Chartered; Deutsche Bank; and the entire UK domestic banking system.
Small wonder UBS is underweight the sector.
We view the Aussie banks as a strong, well capitalised sector delivering mid-teen ROE in a low growth environment. However, given the global chase for yield we believe it has rallied too far, too fast. Since September the Banking Sector has rallied 35% while EPS forecasts are almost unchanged and the sector has delivered~1.5% EPS growth. Post this rally we are left with an Underweight sector stance and no remaining Buy ratings.
H/T Macrobusiness.
Related link:
ANZ extends pay freeze for 900 top staff – FT
