The big four banks’ combined full-year profits are expected to exceed $28 billion, as rising interest rates help the country’s biggest financial institutions rake in higher revenue while bad debts remain subdued.
Opal Capital portfolio manager Omkar Joshi said the key focus for bank investors would be on margins, which are expected to have benefited handsomely from the limited pass-through of official interest rate rises to depositors. Banks’ earnings were also likely to be supported by very low bad debts, Joshi said, with the slowing economy not expected to cause stressed loans for banks until about next year.
Despite the expected expansion in margins, Jefferies analyst Brian Johnson noted bank shares had also rallied sharply in the past month as investors priced in the good news. Westpac shares are up 10.8 per cent in the last month, ANZ shares are up 9.3 per cent, NAB has risen 7 per cent, and CBA has gained 6 per cent.