Australian Banks and short term bearish equities outlook
The banks are still reporting high profits, but you need to look beyond the headline figures and consider the cash profits. These are down and its no surprise.
Australian Banks are in for some choppy times:
- Falling sustainable bank cash profits.
- Bank asset sales -sell off in insurance, wealth advice and superannuation.
- Hayne Royal Commission – bad press.
- Decline in credit growth.
- Macro-prudential tightening.
- Rising global interest rates.
- Less foreign capital flowing in.
- Falling Australian Dollar.
- Falling property prices.
Its no surprise that bank equities prices are falling. Lots of headwinds and few tailwinds.
We have previously written on what will be the bear indicators in the Australian housing market. These red flags are now flying. Slow down in immigration, slowing credit growth, fall in investment loans. fall in interest only loans and decline in foreign sourced funds. This flows on to banks that derive a lot of profit from the housing market.
So long as the banks maintain a sticky dividend policy, and you are in for the long term, you might decide to hold. But if you have fears of capital loss, then its likely not a good time to be buying Aussie Banks. Wait six months, see what happens with the next federal election and see how the economy is doing.
This is not financial advice. See our Disclaimer.