WBC 0.38% $26.55 westpac banking corporation

BANKS GROWTH AT RISK

  1. 415 Posts.
    Hell maybe while your so called rich rellies are overseas you should move and change your name

    Just as many here have been saying banks are to come under preasure from

    Falling financial markets
    bad debts
    Slowing economies
    reduce benefits from cost savings ( already cut as far as they can go)

    As the following article points out that banks will contunie to grow but not at their current rates which is allowing them to trade at a higher than traditional PE.


    SYDNEY, Aug 2 AAP - Westpac Banking Corp Ltd's shares tumbled
    today as investors worried about its future earnings and those of
    its major rivals.
    Westpac yesterday warned it double-digit earnings per share
    (EPS) growth target for the second half of 2002 would be a stretch
    because of weaker equity markets and a loss of business from the
    sale of its AGC consumer finance division.
    It also warned its bad debts expenses, mainly related to
    corporate collapses, could hit the top of its 25-35 basis points
    range for 2003.
    The stock fell by as much as two per cent today before closing
    20 cents weaker at $15.05 on turnover of 6.6 million shares.
    Most of its rivals also suffered with ANZ losing 47 cents to
    $17.68 and Commonwealth Bank 42 cents softer at $30.68 while
    National Australia Bank regained its earlier losses to climb 23
    cents to $34.25.
    Westpac's warning prompted some analysts to downgrade their
    profit forecasts for the bank, with some saying they expected some
    of its rivals would be facing similar pressures.
    Each of the big four banks told investors earlier this year they
    were targeting double-digit EPS growth.
    But market watchers say that the recent falls on global
    financial markets and continuing corporate collapses are likely to
    put the major banks' earnings targets under pressure.
    One suggested that the banks might also not be able to rely on
    cost cutting, including job losses and branch closures, to help
    drive their growth in the years ahead as they might have already
    "cut to the bone".
    Goldman Sachs analyst Nick Selvaratnam said the major banks' net
    profits were under "more pressure than forecasts are suggesting".
    "I would say most won't (meet double digit growth targets) in
    2002...because of bad debts, because of investment market
    considerations."
    But Ausbil Dexia equities director Paul Xiradis said he did not
    believe all the major banks would be suffering.
    "I think there's question marks over one or two of the banks,"
    he said.
    "I guess the Commonwealth Bank being one because it has a fairly
    large exposure towards wealth management and life assurance and
    with (the recent falls on) equity markets and financial markets it
    will be tough to achieve that obviously.
    "But I think operationally though the likes of Westpac and the
    others are performing well and their costs are under control."
    JP Morgan's Brian Johnson was one analyst reluctant to change
    his $2.021 billion profit forecast for Westpac in 2001/02.
    It had been evident that Westpac would not be able to achieve
    double digit EPS growth because of the $1.65 billion sale of its
    AGC arm in May.
    "I think there's a perception that they issued a profit warning
    yesterday and that's not the case at all," he said.
    "When they sold AGC it was always evident ... they would have a
    big balance of capital and so the sale would be EPS dilutive.
    "All they did yesterday was confirm that (EPS growth would not
    be double digit)."
    Westpac will unveil its full year net profit in October. Last
    year its net profit jumped 11 per cent to a record $1.9 billion.
    AAP bt/sh







 
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