The world banking sector has been facing turmoil recently, but is this an issue for Australia's ASX 200 big four banks?
The 'big four' refers to Commonwealth Bank of Australia (ASX: CBA), Westpac Banking Corporation (ASX: WBC), ANZ Group Holdings Ltd (ASX: ANZ), and National Australia Bank Ltd (ASX: NAB).
It was a good day for ASX bank shares yesterday. At market close on Tuesday, Westpac shares finished 1.75% higher at $22.15 apiece, CBA lifted 0.76% to $99.76 a share, ANZ shares jumped 1.6% to $23.56 each, while NAB climbed 1.33% to $28.25 a share.
For perspective, the S&P/ASX 200 Index (ASX: XJO) closed 1.26% higher.
Let's take a look at the outlook for Australia's banks.
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Most capitalised
Australia's ASX 200 big four banks are the most capitalised in the world, Morgan Stanley analysis shows.
This is relevant in light of recent global bank collapses, including California's Silicon Valley Bank. Credit Suisse is also subject to a takeover by UBS after it faced liquidity issues including "significant deposit and net asset outflows".
However, Australian banks have plenty of capital, recent analysis shows. Morgan Stanley Australia head of research Richard Wiles, quoted in the Australian Financial Review, said:
The major Australian banks learned the lessons of the 2008 global financial crisis and have significantly strengthened their liquidity, funding and capital.
Balance sheet risk remains modest, but earnings risk has increased due to a likely move up in the cost of deposits and wholesale funding.
Meanwhile, Australia's treasurer Jim Chalmers has also recently touted the stability of Australia's banks.
In an opinion piece published in the AFR, he said:
The collapse of Silicon Valley Bank and Signature Bank in the US and the takeover of Credit Suisse has sent waves through global financial markets over the past month but Australian banks are well-capitalised, well-regulated and well-placed to deal with this new source of volatility in the global economy.
We are confident but not complacent in the face of these pressures.
Looking ahead, UBS has placed a $100 price target on CBA shares, while Morgans has dropped its price target on CBA to $96.11.
Meanwhile, Morgans has an add rating on Westpac with a $25.80 price target. However, UBS put a neutral rating on Westpac late last month with a $22.50 price target. This is still 1.6% higher than yesterday's closing price.
ANZ has also recently been named as a buy by the team at Citi with a $29.25 price target. UBS has recently placed a buy rating and $25 price target on ANZ shares.
Finally, the team at Goldman Sachs is positive on NAB shares. The broker has a $35.42 price target on NAB shares and recommends the bank as a buy.
Share price snapshot
The CBA share price has slid nearly 7% in the last year, while NAB shares have shed 14%.
Westpac shares have lost nearly 9% over the past 12 months, while ANZ shares have fallen more than 14%.
