Were the bank sell-offs overdone
WBC CBA ANZ NAB
Over the past month, the Royal Commission has been swarming around the banks, CBA was investigated for helping the Mafias, NAB apparently knew about their dirty laundry 2 years ago and Westpac decides to be a rebel and not comply with ASIC's credit card basic inquiry for customers before issuing.
One can argue that these things were bound to happen, but for it to occur in Australia? A country known for its very lawful conducts and very long list of compliance. I did Banking Law a few semesters ago and my notes for the Company Act was at least 10 pages.
Westpac (WBC:ASX) $28.62 (last low July 2016)
Commonwealth (CBA:ASX) $72.31 (last low October 2016)
NAB (NAB:ASX) $28.49 (last low November 2016)
ANZ (ANZ:ASX) $26.86 (last low October 2016)
Surprisingly for NAB and ANZ, they seem to be quite stable this past 2 weeks. Westpac on the other hand, fell 19% in a year.
If this is a "once-in-a-blue-moon" scandal, sure, its definitely a buy with targets at $33.50, a 17% upside but the real question is, is this a one off scandal? Banks have been in the media for all the wrong reasons this past year. From oversight in home loans and aggressive salesman behaviour, potential and current investors should be cautious. However, these banks "can't" fail. The government would probably bail them out if they did.
I think banks should really start cleaning up their acts and set things right. It's definitely easier said than done. And especially when there are people's financial lives at risks, I wouldn't be surprised if another mishap was discovered. One would also have to consider the consequences the Royal Commission might impose on the banks, and the clients who took out home loans when they really can't afford it, unpredictable housing prices and stagnant interest rates and wages.
So, to answer the title, Yes? No? Maybe? There is too many factors riding on it right now that there is no definitive answer. But did the fundamentals of the banks change? Probably not, the perception on the future of the stocks did.
Over the past month, the Royal Commission has been swarming around the banks, CBA was investigated for helping the Mafias, NAB apparently knew about their dirty laundry 2 years ago and Westpac decides to be a rebel and not comply with ASIC's credit card basic inquiry for customers before issuing.
One can argue that these things were bound to happen, but for it to occur in Australia? A country known for its very lawful conducts and very long list of compliance. I did Banking Law a few semesters ago and my notes for the Company Act was at least 10 pages.
Westpac (WBC:ASX) $28.62 (last low July 2016)
Commonwealth (CBA:ASX) $72.31 (last low October 2016)
NAB (NAB:ASX) $28.49 (last low November 2016)
ANZ (ANZ:ASX) $26.86 (last low October 2016)
Surprisingly for NAB and ANZ, they seem to be quite stable this past 2 weeks. Westpac on the other hand, fell 19% in a year.
I think banks should really start cleaning up their acts and set things right. It's definitely easier said than done. And especially when there are people's financial lives at risks, I wouldn't be surprised if another mishap was discovered. One would also have to consider the consequences the Royal Commission might impose on the banks, and the clients who took out home loans when they really can't afford it, unpredictable housing prices and stagnant interest rates and wages.
So, to answer the title, Yes? No? Maybe? There is too many factors riding on it right now that there is no definitive answer. But did the fundamentals of the banks change? Probably not, the perception on the future of the stocks did.
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