WBC, ANZ, HGH: How are these top banking stocks faring on NZX? – Kalkine Media

The banking sector is the backbone of any economy. NZ has 27 registered banks with 3 large NZX-listed banks responsible for a major chunk of lending.

New Zealands banks have reported growth despite signs of an economic slowdown. The Big banks have reported robust FY22 results.

However, according to the Fitch rating agency, banks are well poised and insulated against the economic downturn. According to its latest report, the big banks will benefit from their large franchises and simple business models. In fact, Fitch expects net interest margins to increase in the next over the next two years, despite stiff competition, benefitting from interest rate rises. According to Fitch, profitability is likely to decline over the next two years largely due to changes in the RBNZ's capital framework.

The rating agency expects the economic conditions in New Zealand to be broadly stable over the next two years. Continued economic recovery and a low unemployment rate should underpin banks asset quality. If at all, there will be a moderate but manageable deterioration in asset quality as a result.

However, even though banks capitalisation may suffer to some extent, Fitch does not expect downward pressure on the banks capitalisation and leverage factor scores, reflecting sufficient buffers.

The funding profiles of the big banks will also remain stable in the near term.

Even though the central bank of New Zealand has delivered many OCR hikes, and in August it raised another 50 bps, the banks will raise the mortgage rates, impacting the lending environment in the short term.

Lets examine how are some of the big banks faring on the NZX today:

Source: 2022 Kalkine Media

Australia and New Zealand Banking Group Limited (NZX:ANZ,ASX:ANZ)

ANZ is an Australian bank with operations in New Zealand. On 19 August, the Bank completed its Retail Entitlement Offer to raise approximately NZ$3.5 billion of new ANZ shares. The other part of the Entitlement Offer (institutional offer) was completed on 20 July 2022. This offer raised proceeds of NZ$1.7 billion.

On 18 July, ANZ announced its Q3 update in which it said that all its businesses had performed well.

While rising interest rates and inflation were starting to impact some of the customers, household businesses and balance sheets remained strong with a collective balance of NZ$3.8 billion. With this amount, the Bank was well-placed to continue its growth in the future. ANZ also said that robust lending and margin momentum was continuing across major businesses. And were evident across major

In fact, according to the banks report, the lending margins grew lending volumes grew NZ$2.0 billion in the third quarter, with June month the strongest. In New Zealand, ANZs institutional business performed well with customer lending growth focused on delivering sustainable and high-quality growth. On 18 July, the Bank entered into a deal with Suncorp. Suncorp would be selling its banking arm to ANZ at a total cost of AU$4.9 billion. The deal is expected to give a boost to the banks retail and commercial businesses.

. On 23 August, the stock was trading down 1.19% to NZ$25.000, at the time of writing.

Westpac Banking Corporation(NZX:WBC)

Westpac is also leading banking operating in New Zealand with headquarters in Sydney, Australia. On 1 August, Westpac completed the sale of its insurance arm to TAL Dai-ichi Life Australia Pty. The transaction took almost one year to complete as it was first announced in August, last year. The bank expects to post a loss after sale of approximately AU$1.37 billion. In addition, WBC has been simplifying its operations and the sale of its non-core business is a step in that direction.

Chief Executive of the bank, Peter King said that a technology upgrade would allow the bank to process mortgage applications very fast.

On 23 August, the stock was down 1.66%% to NZ$23.65, at the time of writing.

HGH is an NZ-based financial services company in New Zealand. It announced its full-year results today in which it reported a profit after tax (NPAT) of NZ$95.1 million for the FY22 ended 30 June. This signifies an increase of 9.3% over pcp. The strong result is due to growth in reverse mortgages where older homeowners took out a lot of reverse mortgages to cope with the rising cost of living.

In FY22, HGH bank issued a record NZ$165million worth of reverse mortgages, an increase of NZ$63million over pcp. The bank also predicted that the boom in reverse mortgages would continue well into the next year as older people were hit by the rising cost of living.

The bank also announced an equity raise of NZ$200 with NZ$130 million worth of fully underwritten placement. This will be raised from the shareholders in New Zealand and Australia. With this equity, the bank expects to pay for the acquisition of StockCo Holdings and the rest for the expansion of its existing businesses.

On 23 August, the stock was trading flat at 2.210, at the time of writing.

Bottom Line: The big banks in New Zealand are well placed to overcome the rising inflation interest rates. The big banks are focusing on major acquisitions, and digitalization to keep themselves technologically upgraded.

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WBC, ANZ, HGH: How are these top banking stocks faring on NZX? - Kalkine Media