- NAB's profit result low quality
- UK continues to drag
- analysts worried about mining exposure
- How safe are dividends?
 

By Greg Peel

“We continue to expect NAB will deliver a superior return of total equity trajectory versus peers over the next couple of years, which is not reflected in current valuations,” declare the bank analysts at RBS Australia. “Maintain Buy and preferred sector exposure”.

Unfortunately for National Bank ((NAB)) shareholders, the RBS analysts will be feeling a bit Robinson Crusoe. Their Buy rating stands alone in the FNArena broker database.

Last month NAB pre-issued the basic numbers within its full-year profit result and highlighted an increase in provisions for both UK and domestic exposures, which basically affected a profit warning. At that point most analysts were little surprised, having felt NAB had been slow to top up provisions against bad debts and even after having done so, had not yet closed the gate. Yesterday NAB's official result including all the numbers was released, and aside from a stoic RBS, there were general groans around Bridge Street.

The cash result even missed RBS' estimates and has prompted 2% forecast earnings downgrades from the broker, “entirely due to bad debts”. However RBS notes NAB's provision levels are converging on peers and with deposit competition expected to further ease, the analysts see the above mentioned improvement in return.

NAB management might be moving in the right direction, but movement has been too slow for analysts who believe it's about time management took off its rose tinted glasses. “Since the GFC,” rails UBS, “NAB has been consistently over-optimistic with respect to credit growth, inventory cycle, UK recovery etc. This has led to less conservative business settings than peers”. And trying to catch up is proving a costly process, UBS adds.

Having drawn their bows, the UBS analysts continued to let fly in their post-result report, noting NAB's “unfortunate trend of negative surprises” which has “plagued the bank for more than a decade”. Last December quarter, it was a hit to Treasury trading. In March it was a UK hit. In June it was business bank provision top-ups and in the September quarter, which wrapped up the bank's fiscal year, it was top-ups to collective provisions.

It comes down to NAB's “valuation gap” to peers. The Big Two of Westpac ((WBC)) and Commonwealth ((CBA)) are mortgage juggernauts and all round leviathans relying to a great extent on cost cutting to improve returns while continuing to chase deposit funding in a low loan growth environment. They trade at a premium to the smaller NAB, but “size doesn't matter” (so I'm constantly told) given small peer ANZ's ((ANZ)) valuation chimes with the big boys, leaving NAB on the outer. The smaller banks are seen as riskier but more nimble than the bigger banks, thus offering a higher risk/reward profile. But at the end of the day, one glaring difference is that ANZ has Asia while NAB has the UK.

While the net profit number was known earlier, the break-down delivered by NAB yesterday showed a lack of quality as well as quantity. The final figure included greater than expected profits in Treasury trading, which is nice, but what the Lord giveth the Lord can just as quickly take away in the proprietary punting game. Cost reductions provided another boost which is promising, except that analysts can't see much more room left. Once again the UK division proved it should have been shot long ago – dumped at any price – but having received uninspiring bids this year management has simply crossed its fingers in the hope of an improved UK economy.

And despite the provision top-ups, Deutsche Bank notes provision coverage remains below peers. “We believe these factors [above] will see NAB deliver a below peer return on equity,” the analysts suggest, “despite its higher risk profile, leaving the risk/reward equation uncompelling at current prices”.

Citi notes that if you include the dividend reinvestment (DRP) plan, NAB's dividend payout for FY12 came in at 77% after tax or 111% before (gross). Gross payout of organic capital generated in the past three years has exceeded 100% – “a seemingly unsustainable practice,” says Citi.

NAB has been working to steal market share in recent times, which it has done so mostly from WBC and CBA, in both mortgages (remember the “breaking up” campaign) and more ominously in business banking. Most business banking gains have come from the mining states of WA and Queensland, and are weighted towards small and medium enterprises (SME). The whole WA economy, from the pits in the Pilbara to coffee shops in Perth, rely on the mining industry. For Queensland the equation is not much different, outside of a stagnant tourism industry. With the mining boom plateauing, NAB is looking at some risky exposures.

And this is the problem for most analysts. The UK is an ever present cancer, but domestic exposures are beginning to look vulnerable. And recent provision top-ups still fall short. “Given our fundamentally bearish domestic economic outlook,” says Macquarie, “we will need to see evidence that the resources slowdown has been fully reflected in provisioning before revisiting the longer term thesis,” which revolves around gradual relief from non-core issues (eg UK).

Macquarie also challenges the RBS view on easing competition for deposits, seeing NAB's need to further drive deposit growth as offsetting the benefits of recent loan repricing (courtesy of the RBA) thus maintaining pressure on margins.

Analysts have trimmed earnings forecasts for NAB across the board, and slightly trimmed target prices to affect a reduction in consensus to $25.81 from $25.95. Given NAB's discount to peers, which out of context makes NAB appear “cheap”, Hold is the rating of choice for most. BA Merrill Lynch is sticking with Underperform nevertheless, and JP Morgan retains its sector Underweight, while as noted above, RBS is a lone Buy.

Shareholders can at least rest easy that NAB's consensus forward yield for FY13 of 7.3% stacks up well against Westpac's 6.5% and CBA and ANZ's 5.9% (all fully franked). Solid yield in a yield-hungry world limits share price downside, but as noted above, Citi worries about the payout ratio ahead. 
 

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- AMP update shows improved funds flows
- Contemporary Wealth remains a problem
- Brokers lean to positive ratings despite trimmed forecasts
 

By Eva Brocklehurst

Insurer and wealth manager AMP ((AMP)) leads the market in a range of products. The complexity of the company's product line-up and wide ranging business - it conducts superannuation management, banking and investment -  is reflected in the latest quarterly report on funds under management (FUM) and cash flows.

Some brokers see the improvement in cash flow as a reflection of growth in the business that's strong enough to mitigate the loss stemming from claims in the Contemporary Wealth Protection segment. Cash flows were the best in three years in a quarter that's historically soft, according to BA-Merrill Lynch. However, the loss at Contemporary Wealth of $37 million reflects the third consecutive quarter that AMP has posted such a loss, and this is a relatively large one.

Many brokers focused more on this volatile area and came down on the side of increased risk in the future. In the end, the report was not enough to make brokers change their recommendations. Some tweaked the price targets and most reduced earnings forecasts for the next couple of years. In  the middle of the pack Macquarie stuck with its Hold recommendation and $4.60 price target and noted, on balance, that AMP's synergies were on track and the organic growth outlook was conservative. In its opinion the stock should perform as equity markets rally, but others are preferred for this exposure.

The quarterly update drew commentary that circled around two key items. The net cash inflows of $605 million for the September quarter were welcomed and considered strong. BA-ML noted this surpassed the second quarter ($503m), usually the strongest quarter, and compared to the previous corresponding quarter's net outflow of $335m. The broker believes this is a confidence booster for the continued integration of the AXA acquisition and may suggest high net worth individuals are coming back to the market. UBS was disappointed with AMP's risk business outcome. It had anticipated low single digit earnings upgrades with the release but instead sees the negative claims experience in Contemporary Wealth putting a dampener on the scene. The broker believes that earnings quality and stability needs to improve to justify current valuations. It retains a price target of $4.25. Citi notes the improved cashflows but says this strong result was aided by some one-off items, with some lower margin flows too. So, in its view, the underlying trend is not quite as positive as first appears.

Goldman Sachs was expecting a significant improvement in net flows compared with the third quarter of 2011, because that quarter was unusually weak and markets have improved modestly since then. However, the June quarter is the strongest of the year, so the broker was expecting a drop-off in net flows in Q3. As it turned out, the net flows were not just better than Q311 but were even better than Q212. Goldman Sachs also notes risk insurance annual premium income grew by 3.1% over the quarter, a good outcome. However, on the flip side, Q3 is the quarter that includes all the benefit from CPI and age premium increases on risk policies held within superannuation. This would probably account for a lot of the growth, Goldman admits.

The second string to the broker analysis was the Contemporary Wealth experience loss. BA-ML, like Goldman, said it reflected changes to CPI and age pricing in the quarter and, in this instance, was large given the economic backdrop. AMP has the highest listed company exposure to the superannuation savings market in Australia, the broker notes and, despite super's attractive long-term growth fundamentals, medium-term risks to super fees have risen on the back of emerging political risks and new low cost unbundled products. BA-ML sees this issue affecting near-term sentiment and concludes investment markets are also problematic for AMP. The broker does ponder if this loss should be considered just a one-off or whether there's more risk brewing on this front. It decided to 'give AMP the benefit of the doubt' and lifted the price target to $5.00 from $4.75, reflecting a 2-3% lift to earnings expectations. Moreover, the broker believes AMP has had a good run up from price lows of $3.80 and ultimately should track the broader market.

Citi decided to lower earnings forecasts but lift the target price. Earnings forecasts are reduced by 3% for FY12, 2% for FY13 and 1% for FY14. The target price is now $4.75 (from $4.50) and a Hold is maintained. Citi also dwells on the fact that it is the the third year in a row AMP has incurred experience losses in the third quarter, and each year the losses have increased in size. AMP cites income protection claims and poor lapse experience across its individual risk and income protection books as the source of these losses. Last year there was modest improvement in Q4, something which could happen again according to Citi.

Credit Suisse falls into the cautious category and lowered the FY12 earnings estimate by 4% to reflect the losses, but outer year forecasts are largely
unchanged and it retains a $4.65 price target with a Hold rating. With flows remaining subdued, ongoing structural changes in the industry are driving down margins and increasing capital requirements. Credit Suisse notes the strong take-up of the North wrap platform by AMP’s aligned planner network, with net cashflows of $644m, and the ongoing strength in AMP Flexible Super, with assets under management up 15% on 30 June. As with the others, Credit Suisse finds Contemporary Wealth losses the key negative. Management attributes this to both higher levels of claims and deteriorating lapse rates which, the broker maintains, is usually reflective of a deteriorating economic environment and/or planner churn.

Deutsche echoes this concern, noting the figures for this segment are inherently volatile but the economic background suggests it's a trend that could persist. Deutsche is one of two brokers on the FNArena database which retains a Buy recommendation. It has made a sharper cut to its earnings forecasts, trimming them for FY13 by 4%. This broker looks inside the price/earnings premium to the market, sees it coupled with the strong 3-year earnings outlook and 6% yield, and decides the stock justifies retaining a Buy rating. Deutsche believes the loss in Contemporary Wealth is a short term item, as there is strong support for AMP's wealth business with Q3 net flows and FUM growth tracking well ahead. Moreover, Deutsche forecasts a 1% rise in unemployment by December 2013 (6.4%) which it believes could drive a 10-15% or around $40m rise in claims.

RBS trimmed the target price to $4.45 (from $4.50), keeping it at a 10% discount to valuation to account for the tough operating environment. The broker believes there is strong upside potential for AMP as markets turn around and was encouraged by the excellent progress on the AXA integration. The soft operating environment concerns RBS and this update highlights the earnings headwinds still facing the company. RBS retains a Hold rating. The broker is concerned about the large Contemporary Wealth loss for the quarter, noting it does highlight earnings risks. However, RBS believes this is a risk for the wider industry as well and downgraded earnings forecasts by 5% for FY12 and 2% in the outer years.

On the FNArena database there are six Hold and two Buy recommendations for AMP. The consensus price target is $4.57 and the range is from $4.04 to $5.00.

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- NAB downgrades earnings due to provision top-ups
- UK an issue, but local mining weakness also cited
- NAB ratings downgraded
- Brokers discuss sector implications

By Greg Peel

Since the Australian stock market troughed in June and turned positive, the SPDR financials ETF ((XLF)), weighted to the big banks, has risen 19% in a relatively straight line. Over the same time period, the SPDR resources ETF ((OZR)) has stumbled and bumbled its way to an 8% gain.

Outside of Telstra ((TLS)), Australia's Big Four banks and resource sector majors make up the bulk of the weighting of the Australian stock market. To that end, offshore investors in particular often invest in “Australia” by investing in these big names alone. Prior to the GFC, both banks and resources rallied along together. Post GFC that relationship has changed somewhat, with the two sectors often at odds. If resources run a bit too hard, investors take profits and switch into banks, and vice versa. Alternatively, if one sector is suffering from a particular issue, say falling commodity prices for example, then the impetus is to switch into the other regardless.

One might argue this has been the case since June with respect to Australia's banks. One reason for outperformance.

The other reason for outperformance is the ongoing investor search for yield. Australian banks have offered after-tax dividend yields well above bank bill swap rates and have thus proven a red rag to the yield bulls. Hence despite analyst forecasts of low earnings growth, interest margin pressures and ongoing bad debt risk, bank shares have provided a solid return since the June bottom.

Too solid, perhaps?

FNArena has often alerted readers to a consistently reliable lead indicator of potential bank share price correction (See most recently Banks Now Overpriced – What Does That Mean?). When bank share prices for the most part exceed consensus analyst target prices, one of two things has to happen. Either the analysts have to lift their targets or the share prices have to correct from their overbought positions. Using last night's closing prices, the following table provides the current state of play.

As we can see from the “Upside to target” figures, three of the Big Four are sitting above target, with Westpac ((WBC)) suffering vertigo and ANZ Bank ((ANZ)) right on the line. It's thus not surprising that each of the three outside of ANZ can rustle up only one Buy rating each from the FNArena database. (What is surprising is the equivalent 1/5/2 Buy/Hold/Sell ratios for each. I've seen two the same before but I don't not recall three.)

Over the next couple of weeks, all of ANZ, National Bank ((NAB)) and Westpac will release their full-year (September year-end) earnings results with Commonwealth Bank ((CBA)) providing a first quarter update (June year-end). This will provide an opportunity for the bank prices-in-excess-of-targets rule to be tested. Will the results exceed analyst expectations, leading to target upgrades from analysts and perhaps ratings upgrades? Or will bank share prices correct? Well, we thought we would need to wait at least until the end of this week to begin finding out, until suddenly NAB provided a pre-result profit warning on Friday.

It is worth noting that the above table reflects targets and ratings since the NAB update, and that subsequent analyst response to the update has included two ratings downgrades (one to Neutral, one to Sell) and a target prices reduction to $22.06 from $25.91. NAB shares took a bit of a bath on Friday, and all the banks were sold off in sympathy.

We may thus have the answer to the question. But it depends on what the issues were which determined NAB's profit warning and how much of a “read-through” they have for the banking sector in general.

The answer is that NAB's warning of flat earnings growth for FY12 from FY11, and thus a flat 90c dividend, stemmed from issues both individually specific and arguably more sector-general in nature. A flat earnings result is 3-4% below previous guidance and analysts forecasts. Yet despite the need to trim forecasts for the upcoming official result release, no brokers were much surprised by NAB's warning. It was all to do with provisioning.

Because NAB operates in both Australia and the UK it is required to satisfy two jurisdictions with regard to provisioning requirements as well as globally accepted capital regulations. It's all a bit complicated, but suffice to say analysts long feared NAB had not provisioned sufficiently for bad and doubtful debts (BDD) in its mostly disastrous UK business. With the UK economy continuing to suffer from EU-wide pressure, NAB has already been forced to top up provisions. Initially management did so by raiding its more comfortable Australian-based provisions which, brokers suggested, left local provisioning below-peer and vulnerable to a weakening domestic economy.

That fear has proven justified, given Friday's earnings downgrade from management was the result of increased provisioning for both the UK and Australian businesses. Increased provisioning does not equate to a capital loss – funds are simply shifted into provisions from retained earnings thus reducing reported earnings for the period. So as far as profit warnings go, this one is not too dire. However, management's disclosed reasoning for the provision increases is what has analysts a bit concerned.

UK GDP growth has declined for three quarters now and the past three months have seen an acceleration of that trend. Yet management appears to have been slow to have acknowledged that trend given behind the curve provision top-ups. There is little sign of conditions easing in the UK, so analysts fear further provision top-ups may be required down the track. Credit Suisse, for one, would have liked to have seen a much larger and more “credible” UK increase, even if it meant an equity raising. This is a problem unique to NAB among the Big Four nevertheless, being alone in UK exposure. The irony is NAB tried not so long ago to sell out of the UK but couldn't find any willing buyers. Did management just close its eyes thereafter and hope the bad man would go away?

On the domestic front, NAB's loan book features a relatively high weighting to businesses (45%) and the largest market share among the Big Four of SME and middle market exposures. NAB has also been growing its market share faster than peers in the mining states of Western Australian and Queensland. In topping up local provisions, management cited the recent slowdown in the mining sector and mining-related services as the driving force. The economies of the mining states are very much tied to resource sector success, right down to consumer spending and house prices.

Not only do analysts fear further UK provision top-ups will be required, they note NAB's local provisioning remains below peer levels even after Friday's top-up and may yet need to be increased from a regulatory perspective. NAB has long been regarded as the “riskier” of the four, which is reflected in a more volatile share price. NAB shares had run solidly since June, yet brokers agree for the most part valuation still “looks cheap”. 

“We believe fundamentally NAB's return on equity should continue to improve from here,” declares Macquarie, “which should in the mid-term see valuation improve”. However if shorter term conditions continue to soften the risk is for more required provision top-ups, Macquarie notes, given Friday's “reasonably small overlay increase”. Macquarie has downgraded NAB to Neutral from Outperform, with a nod to recent outperformance.

BA-Merrill Lynch is of a similar mindset. “While we acknowledge NAB's relative valuation appeal,” declares Merrills, “an absolute PE of less than 10x is not cheap in our view. The uncertainty discount may return to the stock for further de-rating”. Merrills has downgraded NAB to Underperform from Neutral.

“Relative valuation” is an interesting concept if we look at the view of JP Morgan. JPM is unusual in that it rates stocks relatively within a sector rather than the full index. A low relative valuation for NAB might thus suggest a good rating but after Friday JPM is retaining Underweight, citing the risks of further provision top-ups creating a “peer-relative earnings drag”.

RBS Australia, on the other hand, is sticking by NAB with an unchanged Buy rating. RBS is now Robinson Crusoe in the FNArena database. “We continue to expect that NAB will deliver a superior return on total equity trajectory versus its peers over the next three years,” say the analysts, “and think its current PE discount to the sector will close”.

So that's NAB, but what about the “read-through”of NAB's profit warning for the rest of the banks? Well, on that issue, brokers are even more divided.

Citi believes NAB's problems do not reflect a broader sector problem. They are all about UK weakness and a shortfall in domestic provisioning relative to peers. Deutsche Bank notes NAB's trading update suggested weak trends in the core business, however the analysts believe this relates to higher UK bad debts than to underlying earnings. “As such we do not think there is a read-through for the sector,” says Deutsche.

UBS is hedging its bets. NAB's update provided a weaker outlook for the Australian economy, with softer mining activity, commodity prices and business conditions being the key issues, the analysts note. “This may have a sector read-through,” UBS suggests, “although NAB has a stronger SME market share”.

In acknowledging NAB's weaker outlook, Macquarie focused on the state divide. As noted above, NAB's greater exposure to the mining states was a factor in the broker's downgrade to Neutral. But hot on the heels of WA and Queensland exposure growth is Westpac, which was once the Bank of NSW and gained even more NSW exposure with its acquisition of St George. In a read-through of NAB's mining warning, Macquarie has downgraded Westpac to Underperform.

Morgan Stanley, on the other hand, has focused on “problem industries” as the core of NAB's exposure, and believes problem industries will remain challenging. NAB has the highest dollar value exposure to problem industries, the analysts point out, but not far off is ANZ. MS prefers retail banking over business banking and thus prefers Westpac and CBA.

Merrills is nevertheless left in little doubt. “With NAB the largest business bank we see a negative sector read across”, the analysts warn. Confidence remains fragile, Merrills notes, and some banks are reporting more downgrades than upgrades in their business portfolios – a shift the analysts think could extend, leading to gradually higher BDDs.

“The quarterly result suggests underlying growth remains tough,” says Merrills. “A key tenet of our negative Australian banks sector view is that the market is over-paying for this low revenue growth. It follows that a de-rating for an uninspiring structural [earnings per share] growth rate of 2-3%, and the potential for [dividend per share] growth to lag, remains a risk”.

If NAB's earnings pre-release does prove to be a warning shot for the sector as a whole, we won't have to wait too long for possible confirmation. ANZ will release its full-year on Thursday (Oct 25), CBA will provide a quarterly update at its AGM next week (Oct 30), NAB will officially report next week (Oct 31) and Westpac will follow suit the week after (Nov 5).

Despite Merrills coming across as perhaps the most negative of peers on Australia's banks, the analysts do admit any market de-rating to come will prove a “slow burn” given the ongoing attractiveness of the banks' relative yields in a yield hungry market. Once upon a time banks were considered “defensive”, but in the lead-up to the GFC they were anything but – a fact proven by the share price collapses and forced capital raisings of 2009-10. However in today's cautious world, the banks have begun to reclaim their defensive mantle. 

To that end, FNArena's oft reliable indicator, suggesting a coming share price correction, may this time work only on a relative basis – underperformance against other sectors due to yield support rather than an outright pullback.
 

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 - Sluggish bank earnings growth expected
 - Some potential sources of upside exist
 - Brokers update expectations and orders of preference

By Chris Shaw

The major Australian banks kick off full year reporting season with ANZ Banking Group ((ANZ)) on October 25, following by National Australia Bank ((NAB)) on October 31 and Westpac ((WBC)) on November 5. Commonwealth Bank ((CBA)) has a different year end to the other majors (June) and so will only provide a 1Q13 trading update on November 7. 

In the view of Macquarie, the bank results will show sluggish earnings per share (EPS) growth of between minus one to plus one percent in half-on-half terms for the sector overall. This will reflect ongoing margin pressures, offset to some extent by reasonable cost outcomes.

For Macquarie, there is possible upside in the results from low quality sources. For ANZ this is likely to be the cost line, for National Bank the upside potential comes from better than expected bad debt outcomes and for Westpac the trading operations could surprise.

Given a weak earnings growth outlook Macquarie suggests outlook statements will again be critical, the expectation being all the banks will adopt a cautiously optimistic view on the Australian economy. This implies the banks indicating that comfortable operating capital positions are closer to being achieved.

Leading into the results, Citi has made minor changes to earnings estimates. These primarily reflect ongoing declines in net interest margins, as while comparables from the second half of FY11 were generally soft the relatively stable market conditions this half mean no material negatives with respect to markets income.

While margin expectations have been lowered, Morgan Stanley points out major bank earnings remain relatively defensive in the near-term and downside earnings risk is low relative to expectations. While funding costs have risen, this has been countered to some extent by loan repricing and expense growth is now being tightly controlled.

Loan losses remain the key swing factor but is currently tracking in line with expectations, while Morgan Stanley suggests as balance sheet pressures have eased funding risk has fallen and capital appears adequate across the major banks.

Retail banking is now the preferred exposure rather than business banking, this given the risk of higher impairment charges for weaker businesses in some industries. Consumer credit quality is proving more resilient, while home loan repricing supports retail banking revenue growth according to Morgan Stanley. There is also greater potential for cost savings within retail banking operations.

In terms of actual result expectations, Macquarie is forecasting ANZ to report cash earnings of $6,054 million and cash EPS of 218c. These results would be increases of 7.1% and 3.0% respectively in year-on-year terms.

For National Bank, the expectation of Macquarie is cash earnings of $5,664 million and cash EPS of 249c, up 3.7% and 0.5% respectively on a year-on-year basis. Westpac's result is expected to show cash earnings of $6,428 million and cash EPS of 204c, increases of 2.0% and 0.4% on a year-on-year basis.

By way of comparison, Citi's EPS forecasts for the banks stand at 214.9c for ANZ, 250.7c for National Bank and and 200.7c for Westpac, while consensus EPS forecasts according to the FNArena database stand at 219.5c for ANZ, 253c for National Bank and 205c for Westpac.

Looking at order of preference for the major banks, there is some variability among brokers. For example, recent price movements sees Citi list Commonwealth Bank as its top pick, followed by ANZ, National Bank and Westpac as number four. The first two are rated as Buy, the latter two as Hold.

Credit Suisse has almost exactly the opposite order, listing Westpac as its top pick given the expectation of a standout result relative to peers. Westpac is followed by ANZ, National Australia Bank and Commonwealth Bank, with Credit Suisse rating both Westpac and ANZ as Buy, National Bank as Neutral and Commonwealth Bank as Underperform. 

Morgan Stanley is different again, rating only Westpac as Overweight, while ascribing equal-weight ratings to Commonwealth and National Banks and an Underweight rating to ANZ. This is within an In-Line industry view.

The reasoning behind Morgan Stanley's order is Westpac provides greater confidence in terms of its margin and loan-loss outlook, while franchise performance is improving and the bank has a stronger capital and provisioning position than do its peers.

While National Bank trades on a discounted multiple relative to peers Morgan Stanley sees this as offset by slowing pre-provision profit momentum and rising loan losses in the business banking operations, while profit momentum for ANZ's institutional and Asian operations is also seen to be slowing and the stock appears fully valued around current levels. 

Of note, the FNArena database shows all four of the major banks are currently trading above consensus price targets, the premiums ranging from around 2% for ANZ to about 9% for Westpac. Sentiment Indicator readings stand at 0.5 for ANZ, 0.1 for National Bank, 0.0 for Westpac and minus 0.3 for CBA.

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