CBA

Sharemarket analyst UBS has provided an Australian Banks Update. Sector Update post WBC result: 1H07: CBA-ANZ-SGB-WBC have reported. NAB-MBL to go: FY2007 f'casts are intact (+14% EPSg seen minor upgrades). Results drivers have been strong credit growth, better than expected margins and solid wealth management growth. BDD has been low, although 90 day overdues are drifting up. Share prices have predicted outcomes. Sector Overweight Maintained. Valuations reasonable: The analyst needed more upgrades especially given strong share price performance of banks in April.

Market analyst UBS has provided an Australian banking sector update. System Credit strength continues in March +14.8%: 12 month credit growth at March-07 was 14.8%; comprising a steady increase in housing credit 14%, sound personal credit growth 12.1% & business credit maintaining high levels of growth at 16.6%. March growth was flat on February (revised down by APRA from 15%).

Sharemarket analyst UBS has provided an Australian Banking Sector Update. They have observed a strong reporting season expectations driving outperformance: The banks' reporting season starts this Thursday 26th with ANZ. The analyst expects this to be one of the strongest reporting seasons in several years, with 1H07E EPSg of 8.7% (seq) driving FY07E EPSg of 13.8%. Earnings risk remains on the upside. They expect the banks' outperformance to continue through this reporting season.

Why put your money in a bank if you can own the bank? Australian banks are big performers especially in recent times. So, comparing term deposits versus investing in bank stocks, which is the better performer?

CommBank (CBA) has a Buy 1 broker call and a share price target of $57.50 from sharemarket analyst UBS. The bank has provided a positive 3Q07 Trading Statement and hence business momentum is maintained in 3Q07. Key messages from CBA observed by the analyst (1) Earnings momentum from 1H07 has been maintained into 3Q07 (2) On track to deliver Cash EPS gth >= peers (3) Retail banking doing well with loss rates less than expected (4) NZ doing well (5) Strong business banking with stable margins (6) Some slight deterioration in SME credit, but well secured (7) 2H07 BDD/RWA flat on 1H07 (8) Wealth Management (WM) FUM growth weaker than expected. Operationally on-track, a strong turnaround opportunity for Commonwealth Bank: The analyst believes the critical message is that CBA's turnaround is on track, with earnings risk on the upside. The analyst sees the medium term opportunites for Commonwealth Bank as: (1) strong, under-leveraged franchise (2) significant changes in executive ranks (3) good upside in both revenues and costs, and (4) potential register squeeze. Risks: (1) retail bank division promises a lot, and (2) delivery is key. In the analyst's opinion, CBA is cheap at a 3% sector discount ex WM: CBA is trading in line with the sector PE at 13.9x (on our 2008 est), down from a 5% average premium. However, if the analyst values all the bank's WM divisions at a 10% discount to AMP, CommBank's Banking operations are trading at a 3% sector discount. Key drivers to Commonwealth Bank of Australia (CBA): (1) stock is cheap on our valuation (2) lead indicators are improving (3) corporate bank is accelerating (4) WM has upside potential. Risks for CBA: (1) retail division execution risk (2) WM gains are partly cyclical.

Market analyst, UBS, have aa Australian banking sector update: The Banking Sector is currently trading on 13.3x (2008E). This looks attractive relative to the market, with a PE Rel (All Indust ex Fin) of 76%. However, if the analyst looks at the implied PE of the banking divisions (ex Wealth Mgmt) the Sector is on 12.6x or a 27% discount to the market. (Valuing all bank's WM divisions at a 10% disc to AMP.) The marke analyst believes this implies (1) Banks are cheap. They are one of the few sectors in the market that have not re-rated over the last two years.

Commonwealth Bank of Australia (CBA) has a Buy 1 broker call and a price target of $57.50 per share from stock analyst UBS. CBA has provided an operational briefing about its wealth management business. The wealth management update highlighted significant improvements made. Key points: (1) Focus on innovation, leveraging bank customers & staff talent (2) CBA is past most unit pricing issues & legacy product run-off (3) Shadow equity to align interest of key staff (4) Process efficiencies delivering margin expansion (5) CommSee (bank CRM) can now access wealth management products. Wealth management is a key growth driver for Commonwealth Bank of Australia. Significant opportunities include: (1) Expansion of infrastructure offerings with dom & int'l funds being raised (2) 50% of IFA's now use FirstChoice (3) Planner rollout has seen 19% growth in bank referrals (4) 25% of FUM now o/seas (5) GI reps in branches led to sales up 29% (6) Looking at underwriting motor. CBA is trading in line with the sector at 13.3x, down from its avg 5% sector premium. However, if they value all bank's wealth management earnings at a 10% disc to AMP, CBA's Banking operations are trading at 12.4x or a 3% sector discount (see within). Key drivers to CBA as observed by CBA: (1) stock is inexpensive (2) the register beckons (3) lead indicators are improving (4) corporate bank is accelerating (5) Wealth Management upside. Risks to Commonwealth Bank: (1) retail division still offers risk (2) Wealth Management gains are part cyclical.

Analyst UBS has given an Australian banking sector update, and the influence of the deterioration in the US mortgage market and its implications for Australia. The analyst remains overweight on the Australian banking sector with ANZ, CBA and WBC having a Buy 1 broker call. Recent weeks have seen significant pressure on the US financial system driven by weakness in the mortgage market.

Analyst Citigroup Investment Research (CIR) have rated all four major banks with a Buy broker call, including Commonwealth Bank (CBA) and Westpac (WBC). With increased dividends major bank shares are now virtually self-funding. Basel II will reduce capital requirements for the major Australian banks, resulting in increased returns to shareholders. The analyst has raised EPS estimates by up to 5%, dividends by up to 9% and return CBA and WBC to a BUY.

Analyst, UBS maintains Overweight over the the Australian banking sector. The revenue outlook for the Australian banks appears strong and seems to be on track for 8% growth in FY07E (which would be the strongest revenue growth in 10 years). The recent CBA & BEN results and ANZ's trading statement all showed revenue growth above trend levels. This is being driven by (1) 15% credit growth (2) 10% growth in household deposits (3) Good fee income, esp in business (4) Underlying margins holding up. Banks attractive at 77% PE relative.