After a bumper set of results, the market is quietly mulling whether this is as good as it gets for Australia’s banks.
A string of solid half-year and quarterly updates has been rewarded by the market, with all four major banks up between 21% and 38% over the past 12 months against a backdrop of strong credit growth and intense competition.
Morgan Stanley’s Australian head of research, Richard Wiles, expects the strong operating environment — underpinned by robust business and mortgage lending — to continue for the next few quarters. But he also believes loan losses have bottomed out and that there is no further margin growth to come.
“Is it as good as it gets? Well, we think it will be difficult for banks to maintain current share prices,” he told a media roundtable last week, in response to questions from Capital Brief.
