CBA confirms why banks remain core to portfolios
Commonwealth Bank has been the best-performing Big Four bank share of the past 12 months, according to data from FE Analytics, seeing returns of 22.5%.
Over one year to 26 September, 2019, the firm, run by Matt Comyn, was the only bank to return share price growth of more than 20% over the period.
In its latest full-year results, the Commonwealth Bank reported net profit of $8.6 billion, but this was down from $9.4 billion in the previous year.
National Australia Bank (NAB) returned 17%, Westpac reported 15.2% and ANZ reported 7.8%, all of the stocks are staples in most Australian equity funds.
It was a particular turnaround for ANZ which been in negative territory at the end of August with losses of 7% in the 12 months to 31 August, 2019.
Dale Gillham, chief analyst at Wealth Within, said Commonwealth Bank offered an opportunity for investors to pick up blue-chip stocks at low prices.
“As the market takes a breather, it will create opportunities to pick up quality blue-chip shares at lower prices in the last quarter of 2019 in the energy, materials and financial sectors including BHP, Oil Search and Commonwealth Bank.”
BHP has returned 16.1% over the period but Oil Search has reported losses of 16.7% after issues in Papua New Guinea.
It will be interesting to see how the share prices held up should there be another rate cut by the Reserve Bank of Australia, which had already cut rates twice this year to 1%.
Gillham said: “The expected RBA rate cut may see the market rise slightly from here prior to the next decline, as any cut to interest rates will encourage more investors to increase their exposure to the share market in the hope of higher returns. Therefore, expect a false rise before the pullback I have been expecting unfolds."
Share price growth of Commonwealth Bank, NAB, Westpac and ANZ over 12 months to 26 September.
AUTHOR
Laura Dew
Recommended for you
Financial advisers will have access to private equity investments run by WTW for the first time as it launches a pooled fund to provide savers with access to traditionally institutional assets.
Three solutions providers – Betashares, Franklin Templeton and Russell Investments – have all launched new ETF products, including one range which uses gearing to help build wealth.
Platinum Asset Management chief executive, Jeff Peters, has shared a progress update on its newly announced turnaround strategy.
There is a role for advisers using inflation-linked bonds in portfolios, according to AXA IM, as the possibility of higher inflation necessitating another US rate hike is not out of consideration.
