This could be the most downbeat bank reporting season we've had in a long while. Feeling nervous yet?
You should be as our big banks have been powering ahead as investors scramble for stocks that deliver relatively high and growing dividends.
The fact that the banks have been able to deliver pleasing results in the main over the past few reporting seasons has also made them a hot favorite among investors and the sector's price-earnings (P/E) multiple are close to record highs as a result.
Falling bad debt provisioning, robust demand for credit from the housing sector and low funding costs thanks to their AAA credit rating and record global low interest rates have kept the stars aligned for our big four.
But the tide could be turning and this month's first half results from three of the big four could throw up subdued outlooks and low-single digit growth rates.
The good news is that dividends are not under threat – not yet at least – but it is difficult to see what catalysts lie ahead as many of the tailwinds behind the industry are starting to subside.
The three big banks that will hand in their report cards include Westpac Banking Corp (ASX: WBC), Australia and New Zealand Banking Group (ASX: ANZ) and National Australia Bank Ltd. (ASX: NAB).
Based on broker surveys done by Bloomberg, here's what you should be looking out for.
Westpac (reporting on May 4):
- Consensus first half cash profit is forecast at $3.87 billion
- Interim dividend estimate is 94 cents a share
- Net interest margin (what the bank makes on loans minus its funding cost) is expected to come under pressure from growing competition
- The market will be focused on the bank's guidance to its strategic direction
ANZ Bank (reporting on May 5):
- Consensus interim cash profit forecast is $3.64 billion
- First half divided is forecast at 88 cents a share
- The bank's soft December quarterly numbers could weigh on its results but the fall in the Australian dollar may offset some of this
- Net interest margin could fall around 7 basis points
- The market will be looking to see how the commodities downturn and slowing Asian economies impact on its business as ANZ is the most Asian exposed Australian big bank
National Australia Bank (reporting May 7):
- Consensus estimates for first half cash profit stands at $3.33 billion
- Interim dividend pegged at $1.02 a share
- The key thing the market will be looking for is an update on its divestment of its UK assets and whether the bank will need to raise capital
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