Kick Off: Westpac Banking Corp v Australia and New Zealand Banking Group

Who will emerge the victor in the battle of the banks?

In the final clash of the battle of the banks Westpac Banking Corp (ASX: WBC) will take on Australia and New Zealand Banking Group (ASX: ANZ) in a match that will decide who finishes on top in Group A of the ASX World Cup.

Pre-match commentary and stats

Westpac is Australia’s second biggest bank and its fortunes have risen with the Australian housing market as it has secured a 23% share of the mortgage market. The bank lends the least (of the big four) to fossil fuel companies.

As Motley Fool commentator Owen Raskiewicz has pointed out ANZ has “demonstrated its ability to grow in Asia,” and arguably has the most aggressive growth plans of the big four banks.

Westpac ANZ
Market Capitalisation $106.85 billion $93.25 billion
Forecast FY 14 P/E ratio 14.13 13.2
Forecast FY 14 Yield 5.3% fully franked 5.2% fully franked
Price to Book Ratio 2.29 2.09
Price to Earnings-Growth Ratio 2.61 1.2

Notes: Thompson Consensus Forecasts, and based on last FY reports.


When it comes to price, ANZ presses forward, with a few shots on goal due to its slightly lower P/E and P/B ratios, and then the significantly lower PEG ratio. The potential downside on Westpac’s shares, resulting from its significantly higher dividend payout ratio of 86% to ANZ’s 76%, proves too much for the Westpac defence.

ANZ scores on price, thanks to a diving header from a long range cross!

ANZ is ahead of Westpac 1 – 0 at half time.

Westpac CEO Gail Kelly starts the second half strongly but charisma doesn’t count for much on the field. Before long, ANZ’s growth strategy in Asia boosts the team and a long-range pass finds ANZ CEO Mike Smith, the most highly paid of all the big bank strikers! (The imaginary) Mike Smith shoots the ball into the back of the net and after sprinting 10m he dives on the ground in celebration, expecting the entire team to pile on top of him.

Unfortunately, however, Smith has been ruled offside, and play has already resumed with a free kick to Westpac.

Before long, the game is over, and a somewhat fortunate ANZ emerges the victor, 1 – 0.

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Motley Fool contributor Claude Walker (@claudedwalker) does not own shares in any of  the companies mentioned in this article.

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