WBC

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.

Westpac Banking (WBC) have a retained hold rating and a share price target of $26.50 from analyst Citigroup Investment Research (CIR). They have commented that despite the bank's material margin decline, above-system volume momentum has led them to upgrade EPS estimates by 1-3% as well as their target price. In the Australian business, market share gains in all major product segments would indicate discounting and third party channels have been a major lever. Despite the rapid-fire growth, this week’s split of the Business & Consumer Banking division, combined with the departure of the Consumer head, indicates management had its own concerns. WBC's approach to provisioning appears more prudent than some other banks. A by-product of this is that the bank's increased volumes will also drive a higher bad debt charge. A new CEO in New Zealand Business Should Provide a catalyst and the analyst is optimistic that this will accelerate the turnaround, though it will take time. Basel II Likely to Provide a Boost in FY08 in CIR's opinion; Together with other major banks, WBC will benefit from capital release on transition to the new accord.

Westpac Banking Corporation (WBC) have an upgraded Buy 1 share trading recommendation and a price target of $28 from analyst UBS. In the analysts' viewpoint WBC has under-performed the broader market by 19% (since Dec 04) and by 14% (since Dec 05). They attribute this lag to (1) its market share slippage (caution, systems and productivity) (2) poor communication of 2H06 numbers on conversion to IFRS (3) recent margin under-performance (4) poor trading income. However the analysts see see clear evidence of a turnaround under-way: (1) 5 mths into the 07 year, we now believe management guidance of 5-10bp off mgns (supported by good margin results from BEN-CBA) (2) YTD volume grth is now running at c.15% annualised (2% above peers) in a strong environment (3) back book to front book drag should ease (4) BDD environment benign (5) management outlook commentary positive. And actions as follows: (1) They upgrade their estimate of 07 margins from -14bp to -10bp. (2) They upgrade their volume growth assumption from 12.5% to 15%. (3) They maintain their cost growth assumption at 5%. (4) They increase their estimate of BDD charges slightly (faster credit card and corporate loan growth). They now forecast 07 EPS gwth of 11%(prev. 6.6%) and up 9% in 08. Their Buy 1 call is consistent with our recent Sector Overweight shift.

Westpac Banking Corporation (WBC) has a Neutral 1 shares recommendation and a share price target of $23.50 from stock analyst UBS. Westpac has made two key announcements at their AGM: (1) Chairman Mr Leon Davis shall retire in March 2007, to be replaced by Mr Ted Evans (2) CEO Dr David Morgan shall not renew his contract which runs to December 2007 (planning to retire from executive life). Westpac (WBC) are exploring options on both external and internal CEO candidates in coming months. There are two issues for WBC according to UBS: Margins and Costs: "(1) WBC has enjoyed sector level EPSg since 04, despite not keeping up with sector volumes. As WBC fixes this vol gap, we ask whether the next year will deliver good EPSg, or will it just prompt EPS under-performance via back book margin adjustment? (2) Will WBC's capex be enough to maintain its near term volume fix and improve its brand scores, or do costs need to go up?"

Westpac (WBC) have a retained Outperform rating and a $25.80 share price target from stock analyst Macquarie Research Equities (MRE). MRE has retained their rating for the bank and maintain that Westpac is their number 1 pick in the banking sector. MRE had upgraded WBC as their key pick stock in the banking industry as a result of an attractive valuation and a view that benefits of recent front line investment would start to flow through as the year progresses, providing upside to forecasts. MRE have upgraded their FY07 earnings forecasts up by 1 percent, and FY08 up by 1.5 percent.

Westpac (WBC) have a upgraded stock recommendation to Outperform from stock analyst Macquarie Research Equities (MRE). Westpac will be giving out a 60 cent dividend on the 16th of November. Westpac is MRE's preferred bank listed on the Australian stockmarket. "MRE expect that by the end of FY07 it will be evident that WBC will be back on track to deliver peer level EPS growth in FY08. This raises the prospect of earnings upgrades to FY08, combined with a significant narrowing of WBC’s discount."

Macquarie Research Equities (MRE) have highlighted some superannuation stocks that will be advantaged from increased capital inflows from the strong super inflows during this year as well as a consequence over the proposed changes to superannuation regulations announced in the 2006 Budget made superannuation.

Macquarie Research Equities (MRE) note that ""

With investors increasingly risk averse, share prices are at risk in this reporting season if profit delivery does not match the market’s expectations. This change in investor risk appetite driven by concerns over the outlook for global growth and the continued increase in cash rates around the world (ECB and Bank of England the most recent) is impacting on market valuations.

Macquarie Research Equities prefers ANZ and Commonwealth Bank (CBA) amongst the majors in the Australian Banking Sector. ANZ Bank has an Outperform recommendation an a 12 month share price target of $28.20. Commonwealth Bank (CBA) also has an Outperform recommendation and have a 12 month stock price target of $46.50. National Australia Bank (NAB) has a Neutral recommendation and a 12 month share price target of $36.30. Westpac (WBC) has a Neutral stock recommendation and a 12 month share price target of $23.75. St.