A CLSA banking analyst has said that the banking sector now offers "relative value".
Despite all the negatives, including the royal commission, slowing credit growth, higher loan losses, and a softer housing market, the regulatory environment is "more accommodative than perceived".
The analyst believes that if the housing market looked like it was going to crash, the Reserve Bank of Australia would intervene with a cut to the official cash rate.
The big four banks, Australia and New Zealand Banking Group (ASX:ANZ), Commonwealth Bank of Australia (ASX:CBA), National Australia Bank Ltd. (ASX:NAB) and Westpac Banking Corp (ASX:WBC) have continued to spiral downwards close to two-year lows yesterday in the market.
Other banks liked by CLSA are Macquarie Group Ltd (ASX:MQG) and the Clydesdale Bank, known as CYBG PLC/IDR UNRESTR (ASX:CYB) in Google Finance, which are rated as "buys". National Australia Bank and Commonwealth Bank are rated as "outperform", while Westpac and Bank of Queensland Limited (ASX:BOQ) are "underperform" and ANZ has a "sell" rating.
The analyst does not see a situation where dividends are likely to be cut.