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Date : 11/01/2022

Global Factors Impacting Big 4 Banking Stocks On ASX

Why Stock Prices Of Banking Stocks Stumbling On ASX?

The ASX 200 has fallen 57 points or 0.77% to $7,390.10 on Tuesday. This follows declines of 0.1% as investors remained cautious as central banks prepare to lift interest rates to fight surging inflationary pressures.

The financial sector retreated 1%. Hence, Macquarie (ASX: MQG) shares went down by 1.42%, ANZ (ASX: ANZ) shares dropped by 1.3%, along with CBA (ASX: CBA) down 1.51%. National Australia Bank (ASX: NAB) was affected as well, losing 0.51%. It was also no exception for Westpac (ASX: WBC) which shredded 0.73%.

Our List of Banking Stocks On ASX That Needs Close Monitoring

Today’s financial sector downturn may just be short-term. Hence, the financial sector was a great place to be invested in last year, with the majority of the big four banks outperforming the market. But which ASX 200 bank shares performed best?

Here are the top four shares we think will dominate the market:

National Australia Bank Ltd (ASX: NAB)

The National Australia Bank (ASX: NAB) share price shot the lights out last year. Hence, NAB cemented one of its best performances since 2013.

Shares in the big four banking constituent surged 27.6% to $28.84 by the end of 2021. For comparison, the ASX 200 Index gained just 13%. Thus, NAB substantially outperformed the benchmark even before dividends.

Indeed, the banking giant’s shares were in demand with investors after it returned to form in FY21. In addition, due to its overweight exposure to business and commercial banking, it has some level of protection. Hence, NAB has some solid foundations from the margin pressures being caused by aggressive home loan competition.

Commonwealth Bank (ASX: CBA)

The CBA share price was on form and charged 23% higher over the last 12 months. This was despite a blip at the end of the year following the release of a weaker than expected first-quarter update. While CBA’s margins are being impacted by the increase in competition for home loans, it was not enough to put investors off.

Hence, CBA exhibits strong results driven by growth across all its business segments. Businesses that include lending, home lending, and household deposits. Furthermore, CBA revealed that business lending grew over 3 times, home lending with household deposits grew by 1.2x.

In addition, the bank finished the period with a very strong balance sheet and capital position. This allowed CBA to declare a fully franked final dividend of two dollars per share. This brought CBA’s full-year dividend to $3.5 per share. This was a 17% increase year-on-year.

Along with this positive news, the bank announced a $6 billion off-market share buyback.

ANZ Bank (ASX: ANZ)

The ANZ share price was not far behind CBA with a 21.2% gain in 2021. As with NAB, ANZ returned to form in FY21 and deliver strong profit growth. In addition, the bank appears relatively well-placed in FY22 thanks to its strong business banking franchise.

Westpac Group (ASX: WBC)

The Westpac share price rounds out the top four after outperforming the regionals with its 10.2% gain last year. Australia’s oldest bank was the worst performer of the big four. This was due to concerns over its margin outlook and cost-cutting plans. Concerning the latter, there are doubts that Westpac will be able to meet its cost base reduction target of $8 billion by FY24.

However, we believe WBC can achieve this and sees 2021’s underperformance as a buying opportunity in 2022.

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