Bank deposit or bank shares?
25/11/2009
Bank shares are yielding four to five per cent and passing the acid test of being better value than a bank deposit. The big four are trading on earnings multiples of 14-15 times according to Shaw Stockbroking.
Banks have kept $13 billion to pay for bad debts. If those debts do not all go bad, shareholders will reap the benefits via dividends or share buybacks.
The big banks' after-tax cash profit declined 2.4 per cent to $16.3bn. The net interest margin, the key measure of loan profitability, improved 16 basis points to 222 points.
Westpac and Commonwealth now control about fifty per cent of the retail mortgage market.
Source: The Australian
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