Another day, another record high for the ASX. The increase today however, was marginal. The ASX 200 index moved 0.1% in the positive direction as it closed at 7511.1 points. All Ordinaries benchmark inched 1 point higher to set a new closing peak of 7779.6, despite a largely flat session. In a rather flat session, Real Estate was the best performer today with a 1% gain, while consumer discretionary and financial followed suit with 0.8% and 0.68%, respectively. Among the stocks, NIB Holdings, Nuix, James Hardie were the top 3 performers, and Nickel Mines, FMG, and Champion Iron declining over 3% each. It was a day where the miners fell, but the banks gained.
ANZ is an Australian multinational banking and financial services company that operates in 33 markets globally with representation in Australia, New Zealand, Asia, Pacific, Europe, America and the Middle East. Coming off an extremely difficult year for the banks and investors in banks with dividends being cut, ANZ’s interim dividend for 2021 was 70 cents per share. The company’s strong earnings, improving environmental conditions and a combination of their strong capital management has given them the confidence to pay this interim dividend. In H1FY21, ANZ’s statutory profit after tax was up by 45% at $2.9mn, driven by a net credit provision release of $491mn. The company has not faced any large credit losses due to the pandemic, in fact they have $4.3bn in their reserve if conditions deteriorate. The company’s capital position and strong balance sheet gives them the flexibility to return surplus capital to shareholders.
With low interest rates continuing to offer favourable operating environments, the run for the banks does not look like it’s over yet, and ANZ is one stock that fits into most investor portfolios. Erasing some of the losses, ANZ shares finished in the green today with a 0.57% increase and closed at $28.23 a share.
CBA shares breached the $100 mark for the first time in its history. Commonwealth Bank shares have performed extremely well since September 2020. The Federal government’s monetary policy has been one of the driving factors for this performance. Easing of regulations around lending and ultra low interest rates have meant that CBA along with the other Aussie banks have enjoyed a rather favourable operating environment.
In what was dubbed as the reflation trade, CBA shares have been on a hot streak since the end of February as value stocks are now in favour over growth stocks, not just in Australia, but globally. Last week, CBA shares also reached the $100 a share mark for the first time in its grand history. Another positive quarterly result was posted by the firm and this has underpinned the already upbeat performance of the stock and taken it to record highs. Business lending, home lending, and household deposits have all increased once again – resulting in a 2% rise in operating income. The operating environment is extremely favourable for the Aussie banks and our economy is going extremely strong. CBA’s dividends are also expected to be given a boost and there are talks of a buyback also around the corner. Either Way, the banks right now are still a good place to be, and CBA is arguably the best among them.
CBA shares closed at $103.41 a share today, gaining 1.15% and taking the 2021 performance to over 25%.
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