ANZ - ANZ Banking Group

[Garpal Gumnut]

ANZ caught my attention yesterday, although it booked a lower close than the previous day it was quite an impressive performance in a generally bad day. Managed it on good volume to boot. (From memory the profit ann. is due any day now?)
Cheers
..........Kauri

I posted the chart on the Elliot Wave thread Kauri, do you think that technically the 4th wave may break down at this stage?

gg

 

[YELNATS]

After announcing results, down 3.7% today to finish at $29.96. As often happens unless company profits guidance is exceeded by actual results, the sp is battered in the short term.

Not to worry, I'm a long term holder, ANZ along with the other major banks are core to my SMSF. I'll use this opportunity to maybe accumulate, also the lower sp means more shares allocated under the DRP.

 

[profithunter]

I shorted ANZ yesterday on CFDs, the stock has run so hard that any disappointment in the earnings report would trigger a sell off and thats exactly what happened. Provisions gowth is rising faster than revenue growth and the div was at the lower end of expectations.

ANZ rallys into every earnings report and sells off after it (check the weekly chart at the end of every Oct and April). its like clock work.

 

[Julia]

Profithunter,

You're suggesting the stock "has run hard". I wish I agreed with you!
Just looking at a 1 year chart, the price with today's drop is not much above what it was a year ago, and even looking at two years, for a core blue chip stock ANZ's performance has been pretty disappointing.

Compare it with, e.g. CBA, which has performed much better.

I've held ANZ for many years but am seriously thinking I'll sell half my holding.

 

[profithunter]

Hi Julia,

When I said 'run hard' I was talking from a short term perspective ie the last few weeks. ANZ has run from $28 to an intra day high of $31.61 yesterday over a few weeks and in my view was primed for a pull back. It still offers good value long term and is one of the cheapest banks on the market but the new CEO is not giving me too much confidence in the stock short term.

 

[Awesomandy]

Hi Julia,

When I said 'run hard' I was talking from a short term perspective ie the last few weeks. ANZ has run from $28 to an intra day high of $31.61 yesterday over a few weeks and in my view was primed for a pull back. It still offers good value long term and is one of the cheapest banks on the market but the new CEO is not giving me too much confidence in the stock short term.

Yeah... not much confidence there, and ANZ has signalled that they might consider raising interest rates independently. That surely is not a good sign.

 

[Kauri]

I posted the chart on the Elliot Wave thread Kauri, do you think that technically the 4th wave may break down at this stage?

gg

Hi Garpal,
I'm still feeling my way with E/W so treat my posts accordingly.
The minor W4 I was/am looking at, although suspiciously out of proportion to the corresponding W2, could still fall further and be valid. Also a point worth considering is the W1orA is the same length as the last up wave...could be a W3orC??.
I'm also still on training wheels when it comes to VSA but it might be a possible scenario unfolding that yesterdays action on very high vol might be what they call capitulation, and todays action, early as it is, just may play out to be stopping vol/start of basing?? the vol today is already higher than normal, will have to wait and see what the punters close it at.
Now you will be as confused as I am
Cheers
..........Kauri

 

[Julia]

Hi Julia,

When I said 'run hard' I was talking from a short term perspective ie the last few weeks. ANZ has run from $28 to an intra day high of $31.61 yesterday over a few weeks and in my view was primed for a pull back. It still offers good value long term and is one of the cheapest banks on the market but the new CEO is not giving me too much confidence in the stock short term.

OK, I see. I think that although the result was of itself pretty good, it was nonetheless not as good as analysts had been expecting.

I agree with your comments about the new CEO. Here is a link to Air Weekly which gives a realistic assessment of ANZ's current situation. Let's hope the new CEO soon finds his feet and begins to generate the same sort of confidence that John McFarlane did.

http://www.aireview.com.au/index.php?act=view&catid=8&id=7087&setSub=1

 

[profithunter]

OK, I see. I think that although the result was of itself pretty good, it was nonetheless not as good as analysts had been expecting.

I agree with your comments about the new CEO. Here is a link to Air Weekly which gives a realistic assessment of ANZ's current situation. Let's hope the new CEO soon finds his feet and begins to generate the same sort of confidence that John McFarlane did.

http://www.aireview.com.au/index.php?act=view&catid=8&id=7087&setSub=1

Apparently a number of strong internal candidates were overlooked for the CEO position. I hope the board has made the right choice. I closed out my short today...next on the watchlist is NAB, it reports early next month.

 

[Rainmaker2000]

Next few years will be interesting for banks........competition is intensifying coupled with a higher rate environment.....this has been coming for a while and the big banks will still make reasonable single digit growth.........the key will be when the 'miracle' Aussie economy has a bad year which it hasn't for what 16, 17 years......as banks are assetless leaches off the broader prosperity, it will be interesting when Aussies discover wages are not increasing and 7 X average earnings is just too much to pay for their own home.....With the Aussie stock index now made up of banks and mining companies, I just can't wait for the storm to come..disclosure: I own about 29 Nab shares.hehe

 

[Kauri]

Just heard a rumour that a Chinese investor has taken a large position in ANZ... has anyone else heard anything??
Cheers
.........Kauri

 

[grace]

Just heard a rumour that a Chinese investor has taken a large position in ANZ... has anyone else heard anything??
Cheers
.........Kauri

Yes, look on business spectator website. Chinese fund has bought about 1% or 1/2 bill dollars worth. I don't know how to put in link.

 

[overule]

if so why there's no reaction to the news ?
ANZ is so down!!! I thought we will be having somekind of chritmas rally

 

[tronic72]

Next few years will be interesting for banks........competition is intensifying coupled with a higher rate environment.....this has been coming for a while and the big banks will still make reasonable single digit growth.........the key will be when the 'miracle' Aussie economy has a bad year which it hasn't for what 16, 17 years......as banks are assetless leaches off the broader prosperity, it will be interesting when Aussies discover wages are not increasing and 7 X average earnings is just too much to pay for their own home.....With the Aussie stock index now made up of banks and mining companies, I just can't wait for the storm to come..disclosure: I own about 29 Nab shares.hehe

Yes, a lot of what you've said is true.

On the other hand, many of their competitors are in big trouble. Just look at the the sub-prime issue currently going on. This could have a huge positive effect on our banks as they tend to be well insulated.

Just look at Centro, the main reason it's in such trouble is the lenders it had access to until recently have said NO MORE.

 

[2020hindsight]

just for the record
here's ANZ for the last 2 years (High Low Close) + averages
Also ANZ vs XAO for last 12 months (candlestix) + ditto (percent indicates relative preformance campared to datum of XAO)

PS I plan to do this to a few stocks - please feel free to either
a) help out and divvy the job up between a few of us
b) suggest amendments to graphs
c) request some stocks you'd like me to post (maybe PM me)
d) tell me it's not necessary lol (or too wasteful of memory maybe?)

 

[Miner]

just for the record
here's ANZ for the last 2 years (High Low Close) + averages
Also ANZ vs XAO for last 12 months (candlestix) + ditto (percent indicates relative preformance campared to datum of XAO)

PS I plan to do this to a few stocks - please feel free to either
a) help out and divvy the job up between a few of us
b) suggest amendments to graphs
c) request some stocks you'd like me to post (maybe PM me)
d) tell me it's not necessary lol (or too wasteful of memory maybe?)

Good stuff
For the Non Techys and failed in Mathematics like me. Please tell what is the one line interpretation of the big graphs ? ANZ is a buy or sell proposition now ?

Regards

 

[vishalt]

That graph, along with NAB's and SGB's tell you that those 3 majors have finished the year flat or weak while WBC and CBA have powered ahead.

It seems that sub-prime debacle really clamped down on the banking sector gains while siphoning confidence as well!

ANZ particularly though has to be by far one of the most painful stocks to hold, it only had 2 good rallies this year lol. But hey its cheap and if you believe in Mike Smith then ANZ may shine in the next couple of years, it still has a sexy dividend and ranges nicely.

 

[brettc4]

I have been doing a little bit of FA against ANZ. Below is a screen shot of the data I am using care of Comsec.

Basically, the result is ANZ has an ROE of 18.4%, ans EPS growth compounded at 9.5% over 7 years.

What is a good ROE and EPS growth for a company, and what is a good ROE and EPS Growth for a bank?

 

[treefrog]

brett

only potential problen I see with your analysis is that covers a period of exceptional growth for the market generally and it is distictly possible for ANZ to enter a period of negative growth which it has currently started since it reached a 10year high late april 07 (31.50) and retraced then up again to the same level and then fell to complete a double top (DT) in the last few weeks.

Technically the uptrend has finished but whether it resumes, consolidates, (sideways) or retraces to a significant support level such as 24.60 or even 23.00 over the mext few months is speculation but the banking sector is under quite a bit of negative pressure atm - the XFJ sector weekly uptrend is still intact (just) but was down 1.9% today

but everyone must make their own decissions

 

[dhukka]

Here we go, get ready for more of this type of news as the year wears on. Anyone who thinks Aussie banks are immune from global credit market turmoil will need to adjust their expectations. The excerpt below is from ANZ's trading update released today.

Credit Quality

The turmoil in global financial markets has impacted a small number of customers and counterparties which is likely to result in higher credit costs.

Consumer credit quality in Australia has remained solid with low arrears and actual losses modestly below initial expectations. The health of the consumer market is reflected in credit card arrears being 5 basis points below levels 12 months ago, high rates of deposit growth, and higher than normal principal repayments on mortgages which have partly offset a high level of
new approvals.

The commercial portfolio remains in good shape overall. A number of reviews have been conducted on key parts of the portfolio which could be impacted by the turmoil and ANZ is comfortable with the overall health of those portfolios.

There are however three specific instances where material provisions are required:

• Exposure to US monoline insurer - between 2005 and February 2007, ANZ entered into derivative transactions which involved selling credit protection on a portfolio of corporate names, and simultaneously buying matching protection from highly rated US financial institutions to remove market risk. This was perceived to involve little credit risk and generated modest trading income.

The significant increase in derivative market credit spreads and volatilities has resulted in a positive mark to market position with the sellers of the credit protection. However one counterparty, which is a US monoline insurer, has been downgraded to a CCC credit rating. The uncertainty around the ability of that firm to meet its obligations under the hedging agreement has resulted in an accounting requirement to raise an Individual Provision of US$200 million based on the current mark to market exposure to that monoline.

The effective economic impact if the monoline insurer fails is that ANZ takes on direct exposure to a high quality portfolio of corporate names. In fact, this portfolio has a higher proportion of investment grade corporates than ANZ’s existing Institutional portfolio. For an actual loss to emerge, around 20% of names within the portfolio would need to default. This would only occur in an extreme environment in which a significant number of companies defaulted globally, which is not anticipated under any current economic scenario.

Whilst the provision will vary with movements in the mark to market, we expect that a significant proportion of the Individual Provision will be written back in future periods.

• Impact of credit rating changes on a commercial property client - a significant credit rating downgrade for one large commercial property client has resulted in a charge to the Collective Provision of around $90 million although at this stage it has not been necessary to make an Individual Provision. A review indicates the factors driving this client’s credit rating downgrade were specific to that client, with the remainder of the commercial property portfolio in good shape.

• Failure of a resources client has resulted in an additional Individual Provision of $51million.