Australian Banks Emerge From Financial Crisis In Better Shape

Post by NeilMc on October 23, 2009 · Under Australian Economy, Business News, Capital Markets, Equities, banking · Comment

Australia’s largest banks have emerged from the financial crisis stronger and in better shape than they were prior to the onset of the crisis, with the market value of both Commonwealth Bank and ANZ now exceeding their peak valuations before the crisis began in mid 2007.

Westpac was the first Australian lender to cross this milestone, after issuing $12 billion in equity to fund its acquisition of St George.

On April 3rd, Westpac’s market capitalisation exceeded its previous record of $57.9 billion set on November 1st 2007.

CBA and ANZ took more time to scale their peaks, but both lenders this month exceed previous records set in November and October 2007 respectively.

Of the Big Four banking groups, NAB is the only lender yet to surpass its previous market capitalisation record of $71.5 billion set on November 15th 2007.

Currently NAB is valued at $64.4 billion, reflecting persistent investor concern at the lenders exposure to UK property.

Stock prices of all the major banks, continue to remain below their peak levels, however the expansion of capital bases has meant that market valuations have grown larger.

Earnings per share amongst the majors are expected to decline in 2009, with analysts predicting drops of between 5 per cent for ANZ and 18 per cent for NAB.

In August, CBA revealed a 14 per cent decline in earnings per share. Westpac’s EPS is expected to fall by 7.5 per cent.

Research last week by Boston Consulting Group placed all the big four comfortably inside the top 30 banks by market capitalisation in developed countries at the end of September.

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