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1、 Asia Pacific Equity Research 27 January 2020 Equity Ratings and Price Targets Mkt CapRatingPrice Target CompanyTicker A mn Price A CurPrevCurEnd Date PrevEnd Date ANZ Banking GroupANZ AU73 415 7525 90Nn c26 80Dec 2026 40Jun 20 Commonwealth BankCBA AU150 364 1084 94UWn c74 80Dec 2074 00Jun 20 Nation
2、al Australia BankNAB AU74 381 8925 80OWn c29 70Dec 2029 30Jun 20 Westpac Banking CorporationWBC AU87 980 0825 21Nn c25 20Dec 2025 00Jun 20 Bendigo and Adelaide BankBEN AU5 058 3110 29UWn c10 00Dec 209 80Jun 20 Bank of QueenslandBOQ AU3 047 447 51NUW7 70Dec 20n cJun 20 Macquarie Group LimitedMQG AU51
3、 689 35145 86OWn c149 00Dec 20136 00Jun 20 Source Company data Bloomberg J P Morgan estimates n c no change All prices as of 24 Jan 20 Australian Banks 2020 Outlook Top line to remain anaemic but reduced tail risks likely to provide a share price floor for the sector Australia Australian Banks Andre
4、w Triggs AC 61 2 9003 8919 andrew triggs Bloomberg JPMA ATRIGGS Nicholas B Dalton 61 2 9003 8900 nicholas b dalton J P Morgan Securities Australia Limited See page 57 for analyst certification and important disclosures including non US analyst disclosures J P Morgan does and seeks to do business wit
5、h companies covered in its research reports As a result investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report Investors should consider this report as only a single factor in making their investment decision 2020 is set to be another
6、 testing year for the retail commercial banks given zero to negative forecast underlying revenue growth and sticky regulatory costs While this suggests it will be difficult to see significant share price upside it is also hard to see material downside given stocks are optically cheap vs an expensive
7、 market there are fewer tail risks than a year ago and there is strong dividend yield support Our top pick in the sector remains NAB which in our view has been oversold MQG also looks attractive as it offers a defensive place to hide from the pressures facing the majors it s no longer cheap but we m
8、uch prefer it over CBA which trades at 17x PER and is our bottom pick We also remain Underweight on BEN but we upgrade BOQ to Neutral given the share price underperformance Top line pressures to persist in FY20 We remain downbeat on the top line prospects of the major banks expecting flat to 2 reven
9、ue growth ex one offs in FY20 driven by 1 subdued system lending growth 2 mortgage market share loss to MQG and second tier lenders 3 margin pressures from lower interest rates mortgage competition and 4 further declines in non interest income On our numbers this will mean no major bank will deliver
10、 positive jaws on an UL basis for FY20 with sticky cost bases driven by regulatory pressures Major bank dividend cuts possible but not our base case While we do see some risk of further dividend cuts for the major banks particularly for WBC this is not our base case a situation helped by the waterin
11、g down of RBNZ capital rules in Dec 19 We view the greatest risk to dividends being greater than expected margin pressure and any significant additional one off costs remediation litigation etc We do forecast dividend cuts for both BOQ 1H20 and BEN 2H20 Our pecking order We have made immaterial chan
12、ges to CBA WBC forecasts to account for lower expected insurance earnings The only change to our ratings is we upgrade BOQ from underweight to Neutral following recent share price underperformance NAB OW 29 70 PT remains our top pick followed by MQG OW 149 PT CBA UW 74 80 PT is bottom pick and BEN i
13、s also rated UW 10 00 PT 2 Asia Pacific Equity Research 27 January 2020 Andrew Triggs 61 2 9003 8919 andrew triggs Table of Contents Executive Summary 2020 looks like a grind 3 Hard to get excited given negative EPS growth likely 3 Cost control unlikely to surprise positively this year 5 However hou
14、sing market capital positions and valuations to provide a floor 6 Macro conditions are subdued but a credit cost spike is unlikely 7 Investor positioning shorts have covered but retail has dominated flows 9 Will we get more dividend cuts this year 10 Our order of preference 12 1 NII struggles likely
15、 to continue 14 System loan growth unlikely to rebound in ST 14 Market share loss to remain a problem 15 NIMs to remain under pressure despite supportive wholesale markets 15 2 Non interest income not yet at the bottom 22 3 Bushfires to have a small impact on FY20 earnings 28 4 Capital risks reduced
16、 however CBA only bank in capital management territory 29 RBNZ capital impacts 30 Capital path from here to meet RBNZ rules 30 5 Earnings changes and PT revisions 33 ANZ Banking Group 43 Commonwealth Bank 45 National Australia Bank 47 Westpac Banking Corporation 49 Bendigo and Adelaide Bank 51 Bank of Queensland 53 Macquarie Group Limited 55 3 Asia Pacific Equity Research 27 January 2020 Andrew Triggs 61 2 9003 8919 andrew triggs Executive Summary 2020 looks like a grind 2020 looks set to be ano
