It's been a big 12 months for investors in Australia's 'Big Four' banks, who have endured the highs and the lows of the 2018 Financial Services Royal Commission and subsequent share price rebound.
What's been happening to Big Four share prices?
The share prices of National Australia Bank Ltd. (ASX: NAB) and Commonwealth Bank of Australia (ASX: CBA) are currently trading 13% higher while Westpac Banking Corp (ASX: WBC) and Australia and New Zealand Banking Group Ltd (ASX: ANZ) have fared even better, climbing 14% and 19% higher, respectively.
Commissioner Hayne's final report turned out to be much more favourable for the banking sector than initially feared, which sparked an instant rebound in most of the major players in the financial services sector.
While the non-majors haven't bounced back quite as strongly, largely due to the market pricing in the lack of structural changes that were expected to reduce the oligopoly of the Big Four, the vast majority of S&P/ASX 200 (INDEXASX: XJO) Index financial services companies have seen their share prices climb higher in 2019.
Where are bank share prices headed in the second half of 2019?
Apart from the odd out-performer such as Magellan Financial Group Ltd (ASX: MFG), the Big Four banks are among the top performing stocks in the sector.
However, when put in the context of last year's significant losses, it's hard to argue that the banks are a solid buy just at the minute.
The banks were stuck between a rock and a hard place in 2018 as the Financial Services Royal Commission put the PR spotlight on their actions at a time when wholesale funding costs were rising significantly.
With the recent interest rate cut by the RBA to just 1.25% per annum (and another one likely to come later in the year), coupled with a cooling off of the interbank bill swap rate (BBSW), the bank's net interest margin's (NIMs) are all of a sudden looking a little healthier.
This profitability measure could well be looking a lot better come November full-year results time if the next rate cut does eventuate, given many are finding a way to avoid passing on the full rate to its customers (despite the Treasurer's best wishes).
