A selloff in Australian bank shares was too good to miss for Goldman Sachs Asset Management.(GSGEPPA)
“The single biggest move in our portfolio over the last two or three months has been buying bank stocks,” Dion Hershan, the fund manager’s head of Australian equities said in an interview in Sydney yesterday.
“We do view this as an opportunity. The weakness is temporary.” The nation’s four largest lenders fell the most last quarter since the three months ended September 2011, amid investor concern a government inquiry into the finance industry may force them to hold more capital.
For Hershan, such worries are misplaced and he continues to expect high dividend yields and loan growth. “Unlike many other people, we’re not concerned about the level of capital among the Australian banks,” Hershan said.
“They are well capitalized” and investors shouldn’t presume the inquiry chaired by former Commonwealth Bank of Australia Chief Executive Officer David Murray will result in increased buffers after the final report is delivered to Treasurer Joe Hockey next month.
Goldman Sachs Asset Management, which has $999 billion in assets under supervision globally, counts Commonwealth Bank, Westpac Banking Corp. and Australia and New Zealand Banking Group Ltd. among the 10 largest holdings in its A$468 million ($411 million) Australian equities funds, as at Aug. 31.
Additional Capital
Murray has sought views on increasing capital requirements for banks considered systemically important. UBS AG said in a note to investors Sept. 8 it was “inevitable” the inquiry would require the major banks to hold more capital and estimated the four largest lenders may need as much as A$68.7 billion in extra capital.
Deutsche Bank AG put the expected capital increase at A$5 billion to A$10 billion over three to four years, and said in an investor note Oct. 17 the four largest lenders could meet such a requirement through retained earnings.
Australia’s biggest four banks have a mean dividend yield of 5.4 percent, beating the national average for Canada, the U.S. and U.K., according to data compiled by Bloomberg. Shares in National Australia Bank Ltd. (NAB) and the other three lenders, which were the biggest gainers in the nation’s equity bull market, declined an average 5.5 percent last quarter.
The stocks have since recovered 5.5 percent. The value of Commonwealth Bank shares fell to 13.5 times estimated earnings on Oct. 14, the lowest since December 2012, according to data compiled by Bloomberg. “Valuations are attractive and dividend yields are compelling,” said Hershan. “We have a favorable view on the Australian banks.”
bloomberg.com
“The single biggest move in our portfolio over the last two or three months has been buying bank stocks,” Dion Hershan, the fund manager’s head of Australian equities said in an interview in Sydney yesterday.
“We do view this as an opportunity. The weakness is temporary.” The nation’s four largest lenders fell the most last quarter since the three months ended September 2011, amid investor concern a government inquiry into the finance industry may force them to hold more capital.
For Hershan, such worries are misplaced and he continues to expect high dividend yields and loan growth. “Unlike many other people, we’re not concerned about the level of capital among the Australian banks,” Hershan said.
“They are well capitalized” and investors shouldn’t presume the inquiry chaired by former Commonwealth Bank of Australia Chief Executive Officer David Murray will result in increased buffers after the final report is delivered to Treasurer Joe Hockey next month.
Goldman Sachs Asset Management, which has $999 billion in assets under supervision globally, counts Commonwealth Bank, Westpac Banking Corp. and Australia and New Zealand Banking Group Ltd. among the 10 largest holdings in its A$468 million ($411 million) Australian equities funds, as at Aug. 31.
Additional Capital
Murray has sought views on increasing capital requirements for banks considered systemically important. UBS AG said in a note to investors Sept. 8 it was “inevitable” the inquiry would require the major banks to hold more capital and estimated the four largest lenders may need as much as A$68.7 billion in extra capital.
Deutsche Bank AG put the expected capital increase at A$5 billion to A$10 billion over three to four years, and said in an investor note Oct. 17 the four largest lenders could meet such a requirement through retained earnings.
Australia’s biggest four banks have a mean dividend yield of 5.4 percent, beating the national average for Canada, the U.S. and U.K., according to data compiled by Bloomberg. Shares in National Australia Bank Ltd. (NAB) and the other three lenders, which were the biggest gainers in the nation’s equity bull market, declined an average 5.5 percent last quarter.
The stocks have since recovered 5.5 percent. The value of Commonwealth Bank shares fell to 13.5 times estimated earnings on Oct. 14, the lowest since December 2012, according to data compiled by Bloomberg. “Valuations are attractive and dividend yields are compelling,” said Hershan. “We have a favorable view on the Australian banks.”
bloomberg.com
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