Three of the big four S&P/ASX 200 Index (ASX: XJO) bank shares underperformed the benchmark this week.
Though following a strong run higher since October, the big bank stocks are still well ahead of the benchmark for the full year.
As of early afternoon trade on Friday, the ASX 200 is up 0.1% for the week.
As for the banks:
- Australia and New Zealand Banking Group Ltd (ASX: ANZ) shares are down 0.9%
- National Australia Bank Ltd (ASX: NAB) shares are down 0.6%
- Westpac Banking Corp (ASX: WBC) shares are up 0.6%
- Commonwealth Bank of Australia (ASX: CBA) shares are down 1.4%
But as I said, longer-term investors in the ASX 200 banks shares don't have anything to complain about.
Here's how they've performed over the past 12 months:
- NAB shares are up 21%
- ANZ shares are up 22%
- Westpac shares are up 18%
- CBA shares are up 17%
All four stocks have smashed the 6% returns posted by the ASX 200 over this same time.
Here's what happened over the week.
ASX 200 bank shares in the news
On Wednesday, the Motley Fool reported on the further potential upside forecast for the Westpac share price by Ord Minnet.
The broker noted that, "Over the next five years, we assume rational competition returns for pricing loans and customer deposits."
According to Ord Minnet's analysts:
As margins shrink and bad debts creep higher, earnings growth will be challenging for the Australian banks in the short term, but the current share price paints too bleak a picture on the medium-term earnings power of Westpac.
The broker has a $28 fair value estimate price target on Westpac shares, some 7% above current levels.
NAB also made headlines on Wednesday following a series of executive changes.
The ASX 200 bank share reported that Rachel Slade will take the position of group executive of business and private banking on 29 April. Ana Marinkovic will step in for Slade to take over her current role of group executive of personal banking.
NAB also announced that Cathryn Carver will be appointed group executive of corporate and institutional banking, commencing on 1 July.
NAB CEO Andrew Irvine said the three executives, "understand the importance of using technology and data to make NAB easier and simpler to bank with".
And on Thursday, CBA provided a somewhat sobering outlook for Australian household spending.
The monthly household spending index (HIS) for March increased by 0.2%. But CBA noted this was largely driven by holiday spending, with Easter falling at the end of March this year.
"Much of the spending lift in March can be attributed to the earlier-than-usual Easter holidays with people travelling and entertaining at home," CBA chief economist Stephen Halmarick said.
Halmarick added:
Beyond Food & Beverage and Transport, gains in other categories were modest, and another fall in spending on Household Goods suggests consumers are prioritising spending on essentials.
The ASX 200 bank share's economist believes the data should help enable the RBA to begin cutting interest rates in September.
