Why the ANZ and WBC share prices are firming up

Posted: 2 July 2021 1:45 pm

Shares in the major banks have jumped 40-50% in the last 12 months.

Shares in Australia's Big Four banks are among the most traded on the ASX boards on Friday. ANZ (ASX: ANZ) shares were trading 0.8% higher at $28.23, while Commonwealth Bank (ASX: CBA), Westpac (ASX: WBC) and National Australia Bank (ASX: NAB) were up around 0.5% each as of midday.

Why investors are cheering the bank stocks

Much of the improved investor sentiment in the big bank stocks is likely linked to a key piece of data.

Corelogic data on Thursday showed Australian residential property prices rose 13.5% in the year to June 2021, their fastest annual rate since 2004. Over the year, house prices rose 15.6%, while units recorded a 6.8% increase.

The gains were largely driven by continued low mortgage rates, accumulated savings through the COVID-19 restrictions and low housing stock but are particularly good news for banks.

That is because the Big Four banks have the largest exposure to the booming housing market.

Home prices have continued to climb in major cities like Sydney, Melbourne and Brisbane spurring lending, allowing the 4 big banks to reverse nearly $1 billion in bad debt provisions, and boosting their half-year profits and dividends.

Improving economy

Meanwhile, the banks are also set to benefit from a continuing rebound in the Australian economy.

Separate data out on Thursday showed manufacturing is expanding at its fastest pace in almost 3 decades, while job vacancies are at a record, which points to more employment gains ahead. Australia's trade surplus also widened to $9.68 billion in May.

The Australian Industry Group performance of manufacturing index rose to 63.2 in June, the highest monthly result since the index commenced in 1992.

Australian Bureau of Statistics figures also show a 23% rise in job vacancies for the May quarter, taking them 57% higher than their pre-COVID-19 level.

Analysts believe the performance of the major lenders is directly linked to the improving domestic economy, which should prop up lending in the key business and housing segments.

That has already helped bank shares post returns of 40-50% over the last 12 months, but clearly investors are counting on more gains.

Considering buying ANZ or WBC shares?

If you are keen to buy shares in any of the Big Four banks, you should consider investing through an online share trading platform.

Not all platforms offer the same list of stocks. Some trading platforms offer US stocks only, so make sure to select a platform that offers ASX-listed stocks.

Choose from the dozens available for Australian investors. Compare the features and fees from the plethora of trading platforms available for Australian investors.

Looking for a low-cost online broker to invest in the stock market? Compare share trading platforms to start investing in stocks and ETFs.

Disclaimer: This information should not be interpreted as an endorsement of futures, stocks, ETFs, CFDs, options or any specific provider, service or offering. It should not be relied upon as investment advice or construed as providing recommendations of any kind. Futures, stocks, ETFs and options trading involves substantial risk of loss and therefore are not appropriate for all investors. Trading CFDs and forex on leverage comes with a higher risk of losing money rapidly. Past performance is not an indication of future results. Consider your own circumstances, and obtain your own advice, before making any trades.

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