Banks still offer good returns

While concerns about the exposure of Australian banks to problems in the US have been circulating over the past few days, analysts say that the banking sector is a safe place to invest in 2008. That's not to say there are no risks from increasing bad debts and slower credit growth, but these are likely to only have a 1 or 2 per cent impact on earnings. Research from Macquarie Equities forecasts that while overall earnings growth may drop back to single figures this year growth across the sector is likely to be around 10 per cent. This compares favourably with growth expectations in the resources sector of 6.6 per cent and only 2.3 per cent for listed property trusts. With the exception of the Commonwealth Bank, shares in the major banks fell yesterday with NAB losing 27 cents to $35.32, Westpac down 36 cents to $26.60 and ANZ 24 cents lower to $26.11.

By The Australian Financial Review