Credit Suisse said in terms of ANZ’s earnings results investors should be looking for a compression in the net interest margin, reasonably strong lending balance growth momentum reflecting favourable currency translation effects, and profitability trends within the Asian business.
Out of the major banks, Credit Suisse believes ANZ and NAB will outperform while CBA and Westpac will underperform.
It believes the earnings report for NAB will be something of a “transitional result for NAB, being the final result for chief executive Cameron Clyne and the first result for chief financial officer Craig Drummond, and the beginning of divisional disclosures following the restructure of the business in 2013”.
Credit Suisse said it will be looking for any signs of a restoration of franchise momentum within NAB’s Australian business banking and expects improved results in the UK.
Regarding the Westpac earnings report, Credit Suisse said investors should look for an emphasis on growth rather than returns, an improvement in mortgage balance growth momentum and a degree of margin net compression.
Credit Suisse said at an industry level the operational issues it recommends looking out for is any shift in net interest margin dynamics, rising amortisation charges accelerating cost growth, scope for further capital management and the usual seasonal increase in consumer arrears.
It said it will also be interested in any management commentary regarding topical industry and environmental issues such as the Financial System Inquiry and APRA’s D-SIB ruling and how they will be incorporated into bank capital targets.
