Today, we briefly review our exposure to the majors banks and update our take on the group. The short of it is that we’re moving the HOLD ratings on ANZ and NAB back to a BUY while WBC remains unchanged, also at a BUY.
That said, Australia’s banking sector has proven to be resilient over bumpy 2024. The Big Four — Commonwealth Bank of Australia (CBA), National Australia Bank (NAB), ANZ Group Holdings (ANZ), and Westpac Banking Corporation (WBC) — delivered stellar performances in 2024, with total returns significantly outperforming the broader market (ASX200: +7.5%). Westpac led with a price gain of 40%, followed by CBA at 34.9%, NAB at 20.2%, and ANZ at 9.8%. These results reflect the sector’s ability to generate strong shareholder returns, even amidst a challenging macroeconomic environment.
The resilience of these banks lies in their ability to balance stable asset quality and earnings performance, despite sector-wide pressures on net interest margins (NIMs) and intensifying competition. Westpac, for example, managed its margins effectively while achieving loan and deposit growth in line with the system, a testament to its operational excellence. ANZ, despite concerns around its integration of Suncorp Bank, has shown solid (ASX200-beating) performance, over the past year, which reflects growing investor confidence in its strategic execution.
