Westpac rounded out the bank reporting season this morning with a quarterly trading update that, like NAB’s update on Friday and Commonwealth Bank’s full-year report last week, was broadly in line with expectations.
The sector is in something of a stasis at the moment with early signs of a deterioration in credit quality — notably for Westpac in consumer lending and for NAB in mortgages — but no need yet for extra provisions for bad debts.
Margins, which have been under pressure from competition for deposits, actually ticked up across the sector. With interest rate cuts in Australia unlikely this year, the pressure from lower rates on margins is at least another half away.
Westpac’s update was the messiest of the three majors (ANZ doesn’t do quarterly updates) as its multi-year Project Unite tech overhaul leaves the outlook for expenses uncertain, although they did rise 2% in this update.
There’s certainly nothing in this results season that would lead investors to bail out of bank stocks, despite the general view that banks — particularly CBA — remain very expensive.
