Investing in the Banks

[S73417H]

Right now I am preparing to invest in the banks. My current plan is to make my move mid February after the Aussie financials are released. Whilst I have a good mind of which banks I will be investing in, I was curious as to other peoples' views of which are likely to be the performers in the coming years.

If you are investing or planning to invest in the banks, who have/would you choose?

 

[Joe Blow]

If you are investing or planning to invest in the banks, who have/would you choose?

For those participating in this thread don't forget to add "why" you would invest in a particular bank.

 

[marklar]

BEN - It's been trading in a channel between $9 and $14 for the past 12 months, it's approaching $9 at the moment, not directly impacted by sub-prime mess, well supported by the local community, purchase of Macquaries' margin loan portfolio is a positive.

m.

 

[S73417H]

For those participating in this thread don't forget to add "why" you would invest in a particular bank.

Cheers! Of course the "why" is the most important part of the entire equation.

 

[So_Cynical]

Suprised no one has posted this story yet...

Big Four Australian banks join global elite...the crisis in the financial system catapulted
all four majors into the ranks of the top 20 global banks for the first time.

As a result Australia's big banks are expect to grab new business opportunities and draw
the attention of more international investors, The Australian reported.

On stock market capitalisation, Westpac is now considered the world's ninth-largest bank,
with a worth of $US28.2 billion ($43.2 billion), ahead of Commonwealth Bank at No15,
National Australia Bank at No17 and ANZ at No19.

http://www.news.com.au/business/story/0,27753,24963177-14334,00.html

Personally i would tend to avoid Westpac because there product range is just not
competitive with the commonwealth and id avoid ANZ simply based on how they
handled the whole OPES prime mess.

 

[MrBurns]

CBA simply because it's the bank of the Govt and should be the last to go.

 

[MrBurns]

Want to talk about Aussie Property? Visit Aussie Property Forums!

I really recommend you incorporate property within this site, and rename this site if need be.
Even though I want to talk about property I want to remain within this site . I think most would agree

 

[S73417H]

It would seem from these poll results that there is some good support both for investing in the banks and for staying out of them. I guess this issue will just come down to timing in the end.

 

[honey85]

CBA! Because it was my first investment and was a positive one

If you really need to invest in banks, I will still choose CBA.

 

[Go Nuke]

WBC because I think it has less exposure to bad debt than some of the other banks.

Just aquired a whole lot more customers too through the SGB takeover.

 

[S73417H]

WBC because I think it has less exposure to bad debt than some of the other banks.

Just aquired a whole lot more customers too through the SGB takeover.

This reasoning seems to be in line with many of the opinion articles and professional recommendations that I have come across. And for that matter, I tend to agree. WBC seems to be in a fairly strong position. That said, I would more than likely split an investment between WBC and CBA in order to diversify in that sector a bit more.

 

[dmagnus]

lately CBA has just been pissing everyone off and commsec really sux too so boo, cant believe Im the only one that picked NAB

 

[agathos]

For my 2 cents worth of opinion,
I was with a doctor this afternoon, having a chat.

He mention that he has been picking up WBC since year 2000.
That was when WBC was about AUD$12-13 bucks.

I bought some WBC twice recently.
But I plan to exit the bank market soon.

My reason being - a friend in Citibank says - the bank bad debt in US has only reached Round #1. Next round , Ding ! Ding! , Round #2, have not come about yet!

I personally think bank will fall even lower................
Not stuff that people want to hear about these days..........

But I think Oil & Gold are better bets (just purely my personal opinion).

Again, opinion is just one thing........

Just 12 months ago, everyone was banging and harping on banks to go balistic
Each and every bank has gone down bang bang bang.......

So, only TIME will tell..............cheers mates...........Agathos.

 

[marklar]

BEN - It's been trading in a channel between $9 and $14 for the past 12 months, it's approaching $9 at the moment, not directly impacted by sub-prime mess, well supported by the local community, purchase of Macquaries' margin loan portfolio is a positive.

Yeah, what would I know? It closed today at $7.62.

m.

 

[nunthewiser]

Yeah, what would I know? It closed today at $7.62.

m.

i stopped out from 8.50 to 8.10

entrys 10.06, 9.50, 9.00




loss ....not happy as was entering for investment purposes and it cost me a penny in fact a few

sheet happens , teach me to not regard "investment " entrys and stop triggers the same as normal trade discipline useage


live and learn

 

[roofa]

Suprised no one has posted this story yet...

Big Four Australian banks join global elite...the crisis in the financial system catapulted
all four majors into the ranks of the top 20 global banks for the first time.

As a result Australia's big banks are expect to grab new business opportunities and draw
the attention of more international investors, The Australian reported.

On stock market capitalisation, Westpac is now considered the world's ninth-largest bank,
with a worth of $US28.2 billion ($43.2 billion), ahead of Commonwealth Bank at No15,
National Australia Bank at No17 and ANZ at No19.

http://www.news.com.au/business/story/0,27753,24963177-14334,00.html

.

This is one of the reasons that I went for all four recently.
It will be interesting to see the Moodys grading update.

http://www.news.com.au/heraldsun/story/0,21985,25080195-664,00.html

 

[doctorj]

Moody's press release

Sydney, February 18, 2009 -- Moody's Investors Service commented that it is to reassess Australian bank ratings in light of the deteriorating economic outlook.

The Australian banking system remains one of the highest-rated in Moody's coverage, with the four major banks carrying Bank Financial Strength ratings of B and deposit and debt ratings of Aa1.

Moody's had previously provided guidance that Australian bank ratings were likely to remain stable if economic growth remained within the 1% range and unemployment below 7%.

As the outlook for the Australian economy continues to weaken, these metrics may well be breached. Moody's Economy.com has updated its economic forecasts for Australia, foreseeing a -0.4% contraction in GDP growth for 2009, and unemployment peaking at 7.2% in the third quarter of 2010.

Moody's will consider the potential impact on asset quality and earnings -- and how this may affect Australian bank financial strength ratings.

At the same time, Moody's notes some significant, offsetting positive developments that will be considered, including:
• Increased capital levels: Australian bank Tier 1 ratios now compare better to their international peers than pre-crisis, if adjusted for calculation differences between jurisdictions
• Lengthened funding profiles, significantly bolstered by the issuance of government-guaranteed debt
• Improved franchise positions as a result of market consolidation and the exit of price-led competitors: this has allowed for stronger asset product spreads, only partially offset by weaker liability product spreads

Moody's debt and deposit ratings incorporate the potential for systemic support. The Australian government has demonstrated strong commitment to supporting the financial system with its debt and deposit guarantee scheme and the AOFM is supporting mortgage originations through its purchases of RMBS. The central bank has also broadened its repo facilities to underpin system liquidity.

The Australian government's financial flexibility to support the financial system if required, and to stimulate the economy, is strong, as highlighted in Moody's recent report "How far can Aaa governments stretch their balance sheets?"

Accordingly, the potential for systemic support is likely to continue to provide a strong underpinning to Australian bank deposit and debt ratings.

Moody's expects to provide a more detailed update by early March.

 

[S73417H]

If WBC hits the 13.50-14.00 dollar mark, im in like wildfire. :

 

[doctorj]

It will be interesting to see the Moodys grading update.

Bank CDS spreads are blowing out across the world, but it's interesting to see what rating they imply for banks (data provided by Moody's).

Bank Name : Current Rating, CDS Implied Rating, difference between current & implied rating
National Australia Bank : Aa1, Baa1, -6
Commonwealth Bank : Aa1, A3, -5
ANZ : Aa1, Baa1, -6
Westpac: AA1, A3, -5

Bond Implied spreads seem to fit in somewhere in the middle of the two, so I'd take it as a rough rule of thumb. CDS-market specific issues are probably widening the Current/Implied spread at the moment.