Brokers still bullish on banks

Despite banks' weaker outlook in the last quarter of 2002, some brokers are still recommending bank stocks to their clients. Salomon Smith Barney says banks' prices are still attractive relative to the market and the decline late in 2002 was due to factors such as slower growth in credit and a probable increase in bad debts. Salomon recommends Westpac, St George and ANZ.

Alliance Capital Management also says investors in bank stocks won't lose money in 2003, however the banks can't be looked at in isolation from the rest of the market. The non-banking sector has more potential for valuation upside if the companies deliver on earnings, ACM's banking analyst said, “but it's a big if”.