The big four banks may have underperformed in 2020, but things would have been far worse had they not rallied hard in the final quarter.
Thanks to a sharp reduction in COVID-19 related loans deferrals, vaccine optimism, the easing of responsible lending rules, and APRA's decision to remove dividend restrictions, the big four banks were among the best performers on the S&P/ASX 200 Index (ASX: XJO) during the final three months of the year.
How did the big four banks perform in the final quarter?
Pleasingly for their shareholders, all the big four banks recorded double digit gains during those final months of the year.
For example, the Australia and New Zealand Banking GrpLtd (ASX: ANZ) share price surged 31.8% higher, the Commonwealth Bank of Australia (ASX: CBA) share price jumped 29%, the National Australia Bank Ltd (ASX: NAB) share price stormed 27.3% higher, and the Westpac Banking Corp (ASX: WBC) share price rose 15%.
Is it too late to buy the banks?
While clearly the banks are no longer the bargain buys they were three months ago, one broker still sees value in some of them.
Here's what Goldman Sachs thinks of the big four:
ANZ – Goldman currently has a neutral rating and $21.37 price target on ANZ's shares. It is forecasting a 98 cents per share dividend in FY 2021 and a 127 cents per share dividend in FY 2022.
CBA – The broker has a sell rating and $65.84 price target on the shares of Australia's largest bank. It has pencilled in dividends of $2.48 per share and $3.52 per share, respectively, over the next two years.
NAB – Goldman Sachs has a buy rating and $22.96 price target on NAB's shares. It is expecting an 85 cents per share dividend in FY 2021 and then a 122 cents per share dividend in FY 2022.
Westpac – The broker also has a buy rating on Westpac's shares, with a price target of $20.34. It expects Australia's oldest bank to pay an 97 cents per share dividend in FY 2021 and then a 120 cents per share dividend in FY 2022.
