Best bank to invest in?

[Nyden]

Re: Bank Shares

Ok instead of jumping into a BMW M3 or Merc C63 AMG I've decided to put $100k into shares for starters, it's never the right time but here I go.

Which bank share is the best or are they all about the same, I'm choosing bank shares because of the safety aspect and the dividends which I understand are quite good ?

Any hints appreciated.

You know that no one can give you advice Burns. The big 4 seem to rise together though - I myself hold 2 of them. ANZ and CBA ... what a wonderful day today is

Dividends ... well, you're a bit late there. Dividends are roughly 4-5% now, which doesn't even match uBank rates. I hold REIT ETFs for dividends, SLF being the core of that. All the capital gains have just been a bonus! That's almost my entire portfolio, barring my BHP holding, but that's quite a modest one

 

[jono1887]

Re: Bank Shares

Ok instead of jumping into a BMW M3 or Merc C63 AMG I've decided to put $100k into shares for starters, it's never the right time but here I go.

Which bank share is the best or are they all about the same, I'm choosing bank shares because of the safety aspect and the dividends which I understand are quite good ?

Any hints appreciated.

The big-4 are fairly safe with decent dividend yeild - CBA, WBC, NAB, ANZ

Theres also others like macqurie bank MQG, bank of qld BOQ and others...

They've been climbing steadily so far and havnt yet reached their peaks of 07/08

 

[Ashsaege]

here is a hint - go and watch the topgear episode where they compare the BMW M3, Merc C63 AMG, and the Audi RS4.

Then go to the BMW dealer and Merc dealer, take the cars for a test drive, and then make up your mind.

 

[MrBurns]

here is a hint - go and watch the topgear episode where they compare the BMW M3, Merc C63 AMG, and the Audi RS4.

Then go to the BMW dealer and Merc dealer, take the cars for a test drive, and then make up your mind.

Did exactly that 2 days ago, except for the Audi.

Going to Porsche in a few minutes when a mate of mine arrives, Merc is awesome, but a little car with a big motor, much more powerful than the M3 which is a really great car, but even if the shares crash it wont be as bad as the depreciation of those toys.

The C63 just scares the **** out of you, brakes are phenomenal which means you can go into corners at ridiculous speeds, which we did, I was petrified at some points.

 

[MrBurns]

Re: Bank Shares

The big-4 are fairly safe with decent dividend yeild - CBA, WBC, NAB, ANZ

Theres also others like macqurie bank MQG, bank of qld BOQ and others...

They've been climbing steadily so far and havnt yet reached their peaks of 07/08

I agree the big 4 one or 2 or spread it around ?

 

[Bill M]

Re: Bank Shares

The big-4 are fairly safe with decent dividend yeild - CBA, WBC, NAB, ANZ

Theres also others like macqurie bank MQG, bank of qld BOQ and others...

They've been climbing steadily so far and havnt yet reached their peaks of 07/08

I agree with this too and best of all they have all nearly doubled in price since hitting their lows

 

[dmalcantara]

Best bank to invest

Hi guys,
I'm new in Australian stock market and I'm trying to figure out which bank in ASX 20, would be better to invest (MQC, ANZ, CBA, WBC) for long term. All of them seem to walk together in my initial analysis.
Thanks

 

[Julia]

I wouldn't be classifying MQG in with the others. Completely different type of operation. You left out NAB.

 

[Dark1975]

Re: Best bank to invest

Hi guys,
I'm new in Australian stock market and I'm trying to figure out which bank in ASX 20, would be better to invest (MQC, ANZ, CBA, WBC) for long term. All of them seem to walk together in my initial analysis.
Thanks

Have to agree with previous posts in reguards to the big four australian banks(Anz,Wbc,Cba & Nab),That they pay reliable dividend yields.In reguards to MQG: it's classified not as strong as the four banks(as above listed),From a lending ratio if looked from Bt lending or MF global as a e.g:

MQG= 85 <---loan to value ratio,compaired to:
ANZ/CBA/NAB or CBA = 90 <---- loan to value ratio.

In short,The big four banks are a more conservative investment(due to it's investment strategies are more conserative),E.G: most of there investments are more in domestic home loan mortgages.
If you look at MQG,It's more recognized as a investment bank for Business/Infrastructure/commercial,E.g:MQG purchased constellation energy as a part of one of it's many investments.
So it's risk to reward is greater,If you chart the past stocks mqg/anz/nab/cba/wbc,You will see MQG @ it's low was $15.25(off memory)So it's share has increased by 400%,As in reguards to the big four banks have doubled from there lows,Except Cba(tripled from it's lows).In saying this MQG is not as defensive as the big four,As MQG once traded close to $100 in 2007.

End of the day im not a financial adviser,So best to DYOR

 

[doctorj]

Re: Best bank to invest

In short,The big four banks are a more conservative investment(due to it's investment strategies are more conserative),E.G: most of there investments are more in domestic home loan mortgages.

I'm no MacBank fanboy, but in fairness to them, saying they're less conservative than ANZ/CBA/NAB/WBC because the vast majority of the latter's exposure are res mortgages is a bit of a non-starter. We've all seen what can happen when banks have concentrated exposures to particular residential mortgage markets and underlying asset prices start going south.
Aus is relatively small market of 20odd million people that is heavily exposed to commodity prices and China - two things that won't keep charging on for ever.

 

[eddyeagle]

From thebull.com.au today:


Credit Suisse warns about optimism

Credit Suisse has warned of "exuberance" in rising big banks' share prices following last week's interest rate hike and several broker upgrades.


Credit Suisse has warned of "exuberance" in rising big banks' share prices following last week's interest rate hike and several broker upgrades.

As JPMorgan upgraded its 12-month price targets for all of Australia's major lenders on Monday, Credit Suisse said banks were now expensive when compared with industrial stocks.

Bank stocks surged three per cent last week after the Reserve Bank of Australia's (RBA) 25 basis point cash rate rise, with analysts tipping forecasts for banks' bad debts in 2010 may be too high.

Share prices rose again late last week as Morgan Stanley lifted its bank forecasts and targets.

But Credit Suisse's Damien Boey says the market may be too optimistic by pricing in a complete normalisation of margins and bad debt charges in 2010 when history shows bad debt charges peak a few quarters after nominal gross domestic product (GDP) starts to recover off its lows.

"If you believe that we really are in a post-stimulus world now and everything is all good, you would expect bad debt charges, at least on the corporate side, to normalise completely," he said.

"The trouble is that ... when the RBA is tightening too quickly then you're not going to get the GDP growth recovery that you previously saw.

"So rather than getting a V-shaped recovery you get a U or even W-shaped recovery in which case the likelihood is that ... bad debts could fall but not all the way back to what they were pre-crisis.

"That's what the market is pricing in for the banks and that's a bit of a problem."

The "early-cycle exuberance" in share prices came after the RBA's rate hike decision which was based on economic data still inflated by the government stimulus, Credit Suisse said.

Mr Boey said the central bank would have gained a clearer picture of the economy by waiting until data emerged that was free from the stimulus' impact.

If the RBA tightens too quickly, this could cause growth to slow prematurely and bad debt charges to remain "stubbornly high", Credit Suisse said.

The broker is recommending clients buy industrial stocks in defensive sectors over the next two months which it says has more earnings growth potential than cyclical stocks.

Credit Suisse has an underperform rating on Commonwealth Bank of Australia (CBA), National Australia Bank (NAB) and Westpac Banking Group, and is restricted from commenting on its client, ANZ Banking Group.

It rates Bendigo and Adelaide Bank an outperform, and is neutral on Bank of Queensland.

The broker's 12-month share price targets are $52.00 for CBA, $30.00 for NAB, $26.00 for Westpac, $12.00 for Bendigo and Adelaide Bank, and $13.00 for BoQ.

Separately, Merrill Lynch downgraded NAB to Underperform on Monday based on its "demanding valuation" and risks surrounding its retail banking strategy.

 

[Dark1975]

Re: Best bank to invest

I'm no MacBank fanboy, but in fairness to them, saying they're less conservative than ANZ/CBA/NAB/WBC because the vast majority of the latter's exposure are res mortgages is a bit of a non-starter. We've all seen what can happen when banks have concentrated exposures to particular residential mortgage markets and underlying asset prices start going south. Aus is relatively small market of 20odd million people that is heavily exposed to commodity prices and China - two things that won't keep charging on for ever.

Yes agreed,If our property market bubbles?Unlike the U.S,Our financial system is alot different?In terms of debt/unemployment?
Our large four banks make profit?Don't rely on goverment handouts?Infact the large four are rated the best 20 in the world.Infact these banks make there money on bank fees..
Yes we are heavily exposed to commodities,Having the largest mining & resouces gaint B.H.P is a good point?Australia's rich in resources?Looks good from my point of view for at least the next 20years.Have the Largest Uranium producers with ERA-15% of the world's electricity is produced from uranium for nuclear reactors(until a alternative energy is found).Not even going to mention coal/iron ore .
Yes it's good to be in good relations with china & india,Since there the new super-power countries with a great appetite for commodities.Infact if you look up the U.S debt-bond securities,You will be surprised on how much china owns!The tides are turning,The sleeping giant china is now awakening.

 

[GumbyLearner]

I hold BEN.

Very little Real Estate exposure.

Having said that shouldn't repeat the first statement.

Still HOLD

DYOR

 

[zzaaxxss3401]

Re: Best bank to invest

Aus is relatively small market of 20odd million people that is heavily exposed to commodity prices and China - two things that won't keep charging on for ever.

What's your definition of "for ever"?

China has a population of 1.33 billion (or 1,330,000 thousand) people - their car ownership has increased from 2/'000 in 1999 to 15/'000 in 2007. It's expected to reach 148/'000 by 2020. That's an increase from just under 20 million cars in 2007 to 200 million cars assuming their population doesn't increase (yeah right).

India has around 1.13 billion and has around 11/'000 people. An interesting 2 page read from 2 years ago: NYTimes.com /2007/10/12/business/worldbusiness/12cars.html

Cars are mostly a lump of steel and four rubber tyres. And with a need for steel and petrol (for rubber / plastic production), commodities and fuel are going to be in demand for at least the next decade. If we start to focus on greener technologies, then nickel (for batteries) has a place. For stainless steel production you need chromium (18%), nickel (10%), molybdenum and of course, steel. For the wiring you need copper. All of which are in big (and accessible) areas of Australia. We're one of the very few countries, where the resources aren't buried under a shopping mall or school.

To manufacture / smelt steel you need coking coal. To run the production line, you need electricity and either a gas or a coal fired power station. Coal is the cheapest (least green) and it's what most of the chinese power stations are running on.

I'm a little off-topic (but one reason the boom won't stop overnight) - I'm getting there...

Australia is one country that has a pretty open immigration policy and our population is growing faster than the normal birth rate. In contrast Japan's population is decreasing because they have a very tight immigration policy. As we've seen over the past decade, water is our biggest problem. If we start treating it as a finite resource, instead of wasting it, we should be able to sustain our current food production levels - we currently produce enough food for around 60 million people, and export a lot of grain and rice (yes, rice of all things). We can sustain a large population and therefore will need housing.

The Big 4 control around 74% of all mortgages. Of all the banks, the CBA holds the largest percentage at 25.3%, followed by WBC at 23.2%. Of the other banks, ANZ focuses on retail banking while NAB on business banking. Which bank? Take your pick... and perhaps throw in a coal, copper and steel mine as well. I know - not very helpful, but perhaps interesting???

 

[gooner]

Personally, I have no bank holdings.

Too expensive given number of shares issued at very low prices, continuing bad debt issues and regulators talking about permanently higher capital levels. Yet not far off record highs.

If shorting was in my strategy book, I would be shorting the big 4, particularly CBA and WBC.

 

[dmalcantara]

Good posts guys. Thanks