The S&P/ASX 200 Banks Index (ASX: XBK) has ripped 51% over this period versus a 22% lift for the S&P/ASX 200 Index (ASX: XJO).

Commonwealth Bank of Australia (ASX: CBA) shares rose from just under $100 in November 2023 to a record of $192 in June this year.

Since then, CBA shares have come off the boil, falling 20% to a closing value of $153.14 yesterday.

Meanwhile, the smaller players of the 'big four' have surged to all-time highs.

The Westpac Banking Corp (ASX: WBC) share price hit a record of $41 this month and closed at $38.02 yesterday, up 12% in FY26.

National Australia Bank Ltd (ASX: NAB) shares soared to a record $45.25 this month and closed at $40.63 yesterday, up 3% in FY26.

ANZ Group Holdings Ltd (ASX: ANZ) shares reached a record $38.93 this month and closed at $34.91 yesterday, up 20% in FY26.

The following chart shows the big four's performance since November 2023 and the recent divergence of the CBA share price.

How do experts rate the big four banks?

Brokers appear pretty pessimistic on the big four ASX bank shares today.

Macquarie has neutral ratings on ANZ and NAB shares with 12-month price targets of $35 and $39, respectively.

The broker has underperform ratings on CBA and Westpac shares with price targets of $106 and $31, respectively.

All of those price targets imply downside from here.

Bell Potter is underweight on CBA shares and overweight on ANZ shares.

On CBA shares, the broker says:

We are moving further Underweight in CBA, establishing it as our largest active underweight position in the Core portfolio.

The bank's valuation premium has expanded to an extreme and, in our view, unsustainable level, trading at a P/E multiple that is ~40% above the peer average.

On ANZ shares, the broker says:

We are moving to an overweight position in ANZ, which we see as the clear relative value proposition and our preferred holding in the sector. ANZ delivered the cleanest and highest-quality result of the recent reporting season, providing a tangible "self-help" story that NAB and CBA lack, while Westpac's is relatively priced in.

Wilsons Advisory rates ANZ as the best value among the ASX bank shares "on all key valuation metrics".

Morgans has a trim rating on ANZ shares with a price target of $33.09. The broker has a sell rating on NAB and CBA shares.

Wilsons notes that Westpac shares offer an attractive dividend yield and the bank has "the strongest balance sheet" of the big four.

Buy this ASX bank share instead

On The Bull this week, Tony Paterno from Ord Minnett revealed a buy rating on small-cap ASX bank share, MyState Ltd (ASX: MYS).

Paterno explained:

MYS is a national diversified financial services group. Brands include MyState Bank, Auswide Bank, Selfco and TPT Wealth.

We view MyState as an attractive income stock with dividends to reflect stronger earnings growth during the next three years as Auswide merger synergies are delivered.

In an expensive banking sector with only modest forecast earnings and dividend growth to fiscal year 2028, we believe MYS is a standout.

The post Buy this ASX bank share instead of the 'big four': expert appeared first on The Motley Fool Australia.

MyState shares closed yesterday trading for $4.38. As we head into the Tuesday lunch hour, shares are swapping hands for $4.33 apiece, down 1.1%.

For some context, the ASX 300 is down 0.1% at this same time.

Taking a step back, MyState shares have outperformed the index over the past year, gaining 18.6% compared to the 7.8% gains posted by the index.

And that doesn't include the 20.5 cents a share in fully franked dividends MyState paid out to eligible stockholders over the full year. At the current share price, that sees the ASX 300 financial stock trading on a fully franked trailing dividend yield of 4.7%.

As for what's next, Ord Minnett's Tony Paterno expects more outperformance ahead for MyState shares (courtesy of The Bull).

Should you buy the ASX 300 financial stock today?

"MYS is a national diversified financial services group," said Paterno, who has a buy recommendation on the ASX 300 financial stock.

"Brands include MyState Bank, Auswide Bank, Selfco and TPT Wealth," he noted.

MyState released its FY 2025 results on 19 August. Commenting on those results, and citing the first reason the stock is a buy, Paterno said:

The company managed $12.9 billion in home loans at the time of reporting its full-year results in August. It had 275,000 customers across Australia's eastern seaboard. MyState delivered an inline profit result and final dividend in fiscal year 2025.

As for the second reason you might want to buy shares today, Paterno said, "We expect MyState to extract increasing synergies from the Auswide merger in fiscal years 2027 and 2028. Also, integration costs should subside."

And the third reason the ASX 300 financial stock is a buy is its attractive passive income stream.

"MYS is an attractive income stock and should deliver a fully franked dividend yield above its peer banks and the small capitalisation market during the next three years," Paterno concluded.

What's happening with MyState's Auswide merger?

MyState's merger with Auswide was first announced in August 2024 and completed in February this year.

Commenting on that merger following the ASX 300 financial stock's FY 2025 results release, MyState CEO Brett Morgan said, "In FY25, we completed a transformational merger, delivered synergies and maintained a disciplined approach to integration."

Morgan added:

In the four months since the merger, we have grown the total loan book by 7.5% on an annualised basis and achieved annualised synergies of $8.4 million. We remain on track to deliver $20 million to $25 million in annual pre-tax cost synergies over three years.

The post 3 reasons to buy this high-yielding ASX 300 financial stock today appeared first on The Motley Fool Australia.

That's because analysts have just named three ASX shares that they think investors should buy, courtesy of The Bull.

Here's what they are recommending to clients:

Bravura Solutions Ltd (ASX: BVS)

The team at DP Wealth Advisory believes this wealth management software provider could be an ASX share to buy. That's despite its shares rising by almost 130% since this time last year.

Its analysts are positive on Bravura due to its high levels of recurring revenue, strong earnings growth outlook, and attractive return on equity. They said:

The company provides software solutions to the wealth management, life insurance and funds administration industries. Recurring revenue of more than 60 per cent adds to its appeal. In a recent update, management upgraded earnings due to a stronger British pound and from generating more work. Forecast earnings per share growth in 2026 and an attractive return on equity paints a bright outlook.

MyState Ltd (ASX: MYS)

Over at Ord Minnett, its analysts are feeling bullish about this diversified financial services company.

They believe the ASX share has a positive outlook thanks to its merger with Auswide and expect the synergies to start showing in 2027 and 2028.

In addition, the broker believes that MyState is positioned to provide income investors with a better dividend yield than peers for at least the next three years. It explains:

MYS is a national diversified financial services group. Brands include MyState Bank, Auswide Bank, Selfco and TPT Wealth. The company managed $12.9 billion in home loans at the time of reporting its full year results in August. It had 275,000 customers across Australia's eastern seaboard. MyState delivered an inline profit result and final dividend in fiscal year 2025. We expect MyState to extract increasing synergies from the Auswide merger in fiscal years 2027 and 2028. Also, integration costs should subside. MYS is an attractive income stock, and should deliver a fully franked dividend yield above its peer banks and the small capitalisation market during the next three years.

Qube Holdings Ltd (ASX: QUB)

Finally, Ord Minnett also rates this logistics solutions company as an ASX share to buy.

Its analysts think that recent share price weakness has given investors a buying opportunity. Particularly given its diversified earnings and strong balance sheet. They said:

Qube provides integrated import and export logistics services in Australia. Underlying revenue of $4.46 billion in fiscal year 2025 was up 27.3 per cent on the prior corresponding period. The dividend of 9.8 cents was up 7.1 per cent. Given recent share price weakness, we have upgraded Qube to a buy rating, noting the company's diversified earnings across segments and geographies assists in cushioning the impacts of specific customer contract losses. The strong balance sheet and elevated capital expenditure program supports earnings forecasts moving forward.

The post Why these 3 ASX shares are top buys this week appeared first on The Motley Fool Australia.

It's a financial institution with a presence across Australia. Its merger with Auswide means its biggest four exposures are Queensland, Victoria, Tasmania, and New South Wales.  

MyState is a small business compared to the big four banks of Commonwealth Bank of Australia (ASX: CBA), ANZ Group Holdings Ltd (ASX: ANZ), Westpac Banking Corp (ASX: WBC), and National Australia Bank Ltd (ASX: NAB).

Pleasingly, MyState is delivering growth for investors, which is helping the underlying value of the business.

Growth for the ASX bank share

In the FY25 result, MyState reported total operating income growth of 22.4% to $186.6 million, core earnings growth of 16.1% to $59.7 million, and underlying net profit after tax (NPAT) growth of 17% to $41.3 million.

Those numbers were driven by the merger with Auswide, leading to customer loan growth of 62% to $12.9 billion, and customer deposit growth of 71% to $10.1 billion.

The merger is expected to deliver significant synergies for the ASX bank share. In the four months since the merger was completed, annualised synergies of $8.4 million have already been achieved. Over a three-year period, annual pre-tax synergies of between $20 million and $25 million are expected.

MyState also noted that Auswide has launched a new partnership with Elders Ltd (ASX: ELD) to distribute its banking products through Elders' extensive rural network. Those products include arm management deposits, term deposits, cash management accounts, and savings accounts.

I'm expecting the business to deliver pleasing underlying earnings per share (EPS) growth in FY26 and beyond.

Solid dividend

The board of directors decided to declare a final dividend of 11 cents per share with the FY25 result, up from 10.5 cents per share in the HY25 report.

That brought the FY25 annual dividend to 21.5 cents per share, which translates into a grossed-up dividend yield of approximately 7%, including franking credits.

If the ASX bank share maintains the same dividend payout ratio, then earnings growth can help the company grow its dividend in the coming years.

Compelling forecasts for the ASX bank shares

The predictions on Commsec suggest the business could generate EPS of 32.9 cents in FY26 and 40.7 cents in FY27. That means it's trading at 13x FY26's estimated earnings and 10.6x FY27's estimated earnings. With that earnings outlook, I think it's trading at a low price-earnings (P/E) ratio for the potential growth.

The Commsec forecast also suggests the annual dividend per share could grow to 22 cents in FY26 and then 26 cents in FY27. At the time of writing, that translates into a grossed-up dividend yield, including franking credits, of 7.3% in FY26 and 8.6% in FY27.

I think the next two years look very compelling for the ASX bank share.

The post Why this ASX share could be the best bank buy for dividends after the FY25 result appeared first on The Motley Fool Australia.

MyState is a relatively small financial institution which has a significant position in the Tasmanian market, though it's also spread across other states. It recently merged with Auswide, another smaller financial institution with the majority of its lending from its Queensland. The combined MyState business is now nicely diversified.

The financial institution isn't as known as names like Commonwealth Bank of Australia (ASX: CBA), Westpac Banking Corp (ASX: WBC), ANZ Group Holdings Ltd (ASX: ANZ) and National Australia Bank Ltd (ASX: NAB). This lower level of investor attention means the company can provide an attractively-high dividend yield.

Large dividend yield projected

The business is providing investors with a relatively generous dividend payout ratio, providing good cash flow for investors.

Dividends are decided by the board of a company and are influenced by the company's profitability, its balance sheet and its outlook.

Looking at the projections on Commsec, the ASX bank share could pay an annual dividend per share of 23 cents. That translates into a grossed-up dividend yield of 7.4%, including franking credits.

Considering CBA is projected for FY26 to pay a grossed-up dividend yield of 4.4% (including franking credits), I think MyState is a more appealing option.  

Why this could be a good ASX bank share to buy

There are quite a few reasons to like the business aside from the large dividend yield.

MyState is expecting the merger with Auswide to deliver annual pre-tax cost synergies of between $20 million to $25 million over a three-year period. The increased size of the business will also increase capacity to invest in profitable growth opportunities. This should deliver double-digit earnings per share (EPS) growth based on the full synergy benefits.

The ASX bank share says that it's strongly capitalised, providing capacity for growth.

I think the bank could also benefit from increasing credit demand which I expect will occur, or is occurring, due to the RBA cash rate cuts we've already seen this year as it spurs demand.

The MyState share price is currently trading at 13x FY26's estimated earnings, according to Commsec. I think this is a very appealing valuation to buy at.

The post With a forecast dividend yield of over 7%, is this ASX bank share a buy? appeared first on The Motley Fool Australia.

It could be a wise idea to allocate future investments to different stocks, partly to avoid concentration risk and boost the portfolio's dividend yield because the CBA dividend yield is now quite low.

According to the independent forecasts on Commsec, CBA is projected to pay an annual dividend per share of $4.95 in the 2025 financial year. At the current CBA share price, the grossed-up dividend yield is 4.5%, including franking credits.

I think we can find stronger yields than that with the below two stocks.

Telstra Group Ltd (ASX: TLS)

Telstra is one of my favourite ASX blue-chip dividend stocks right now because the yield looks appealing, and the dividends are going in the right direction.

In the FY25 half-year result, the business decided to hike its interim dividend per share by 5.6% to 9.5 cents. That's an annualised grossed-up dividend yield of 6.5%, including franking credits. That's approximately two percentage points better than the CBA dividend yield for FY25.

The business is expected to continue growing its profit and dividend in the coming years. According to estimates from broker UBS, Telstra's annual dividend per share could rise to 27 cents by FY29, which would be a grossed-up passive income yield of 9.3%, including franking credits.

The telco can grow its profit in various ways, including adding mobile subscribers, increasing the mobile average revenue per user (ARPU), growing its wireless (5G-powered) broadband customer base, and improving its overall operating leverage.

MyState Ltd (ASX: MYS)

If investors want to increase their exposure to the banking sector but not through CBA shares, MyState could be a compelling option.

It's headquartered in Tasmania but has a presence in other states, particularly after acquiring Auswide Bank.

MyState doesn't have the same scale advantages as CBA, but it's a sizeable player and trades at a cheap valuation, enabling a good dividend yield.

In the recent result, it paid an interim dividend per share of 10.5 cents. That's an annualised grossed-up passive income yield of 7.3%.

The company delivered solid numbers, in my view, with customer deposits up 2.2% to $6.1 billion, home lending up 0.3% to $8 billion, and a steady net interest margin (NIM) compared to FY24.

According to the forecasts on Commsec for FY25, it's trading at 12x FY25's projected profit with a possible grossed-up dividend yield of 8.4%, including franking credits.

The post Overinvested in CBA shares? Here are two alternative ASX passive income options appeared first on The Motley Fool Australia.

The recent strength of bank share prices is great for long-term shareholders, but it has reduced the potential of near-term dividend yields. When a share price goes up, new investors won't get as high a dividend yield.

For example, if a company has a dividend yield of 5% and its share price jumps 20%, the dividend yield falls to 4.2%.

That effect has happened with the major ASX bank shares in the last 12 months.

Major ASX bank share yields get pushed down

• Shares in Commonwealth Bank of Australia (ASX: CBA) are up 42%
• The Westpac Banking Corp (ASX: WBC) share price has climbed 40%
• National Australia Bank Ltd (ASX: NAB) shares are trading 26.6% higher
• The ANZ Group Holdings Ltd (ASX: ANZ) share price lifted 13%.

Using the estimates for Commsec, these are the following forecast grossed-up dividend yields for the ASX bank shares in FY25 (including ANZ's lower franking level).

• CBA could have a grossed-up dividend yield of 4.3%.
• Westpac could have a grossed-up dividend yield of 6.5%.
• NAB is projected to have a grossed-up dividend yield of 6%.
• ANZ is forecast to have a grossed-up dividend yield of 7%.

Those yields aren't terrible, but they're not as attractive as they once were.

There's another bank that appeals to me more for passive dividend income.

MyState Ltd (ASX: MYS)

This is a relatively small, Tasmania-based banking business with a history stretching back more than 65 years. It offers various products, such as bank accounts, term deposits, loans, and insurance.

MyState's merger with Auswide Bank Ltd (ASX: ABA) was recently approved. Based on FY24 figures, this significantly diversifies the geographical footprint of its loans, with 20.6% in Tasmania, 20% in Victoria, 34.4% in Queensland, and 18.2% in NSW.

The exposure to Queensland is appealing to MyState because of "strong fundamental growth drivers."

The combined business will have "improved scale and operating efficiency with a stronger and larger balance sheet and increased funding flexibility." It can invest in profitable growth opportunities, enhance the digital customer experience, improve data, regulatory, risk management, and cybersecurity, and invest in people and systems.

The ASX bank share is expected to achieve pre-tax cost synergies of between $20 million and $25 million per year.

The valuation and dividend yield look very appealing to me. According to the forecasts on Commsec, the MyState share price is valued at 13x FY25's estimated earnings with a forecast grossed-up dividend yield of 7.5%.

The Commsec projections then suggest profit could rise by 16% in FY26 and it could pay a grossed-up dividend yield of 8.1% in FY26.

Those numbers look attractive to me, with good prospects of growth in the medium term.

The post Which ASX bank share I'd buy for dividends appeared first on The Motley Fool Australia.

It's certainly impressive that the Commonwealth Bank of Australia (ASX: CBA) share price has risen more than 36% this year, and the Westpac Banking Corp (ASX: WBC) share price has soared 40%. But I'd argue that those banks are now priced very highly for the profit they could make in the next three to five years.

Instead, I'm looking at some of the other banks as opportunities. Here's why I like them.

Macquarie Group Ltd (ASX: MQG)

Macquarie is another of Australia's largest financial institutions. With a market capitalisation of $85.25 billion, it is now slightly bigger than ANZ Group Holdings Ltd (ASX: ANZ), which has a market cap of $85.18 billion.

But, I think Macquarie has much stronger growth potential than the big four ASX bank shares because it has global operations across multiple divisions, including investment banking, Macquarie Asset Management (MAM), and commodities and global markets (CGM).

Macquarie is also looking to challenge the domestic Australian banks by growing in the mortgage and deposit segments of Australia's banking industry.

With Donald Trump and the Republicans taking charge in the US, combined with the lower interest rates in the US, I think there could be much stronger deal flow in the US (and globally in general) for Macquarie to try to capture a piece of. This would be positive for earnings.

According to the forecasts on Commsec, the Macquarie share price is valued at 23x FY25's estimated earnings and 19x FY26's estimated earnings.

MyState Ltd (ASX: MYS)

MyState is a smaller ASX bank share with its headquarters in Tasmania, though it also has a sizeable presence across the mainland.

I think there are three good reasons to like the banking business.

First, the company is looking to merge with Auswide Bank Ltd (ASX: ABA). This merger is expected to deliver significant advantages for the company, including scale benefits, increased funding flexibility, and a boost in earnings per share (EPS). Cost synergies are expected to be between $20 million and $25 million, including the consolidation of technology platforms, integration of shared services, a "refined" leadership and management structure, and a consolidation of third-party providers.

Second, the business trades on a more appealing price-earnings (P/E) ratio than the major ASX bank shares. According to Commsec, the Mystate share price is valued at 12.5x FY25's forecast earnings and 10.8x FY26's forecast earnings.

Third, the ASX bank share offers a very appealing dividend yield (which is expected to grow). According to Commsec, it could pay a grossed-up dividend yield of 7.9% in FY25 and 8.5% in FY26, including franking credits.

The post 2 strong ASX bank shares to consider before year-end appeared first on The Motley Fool Australia.

In fact, we've seen a few ASX 300 shares even mint fresh new highs this session. Let's check out these lucky exceptions to today's savage market.

Three ASX 300 stocks hitting new highs this Thursday

Mesoblast Ltd (ASX: MSB)

First up, we have ASX 300 biotech share Mesoblast. Get ready for this one. Mesoblast shares closed at $1.98 each yesterday afternoon. But today, those shares have exploded a whopping 48.5% higher and are currently going for $2.95. That's after Mesoblast hit a new 52-week high of $3.01 earlier this session.

As we covered this morning, this extraordinary gain comes after the company revealed that the US Food and Drug Administration (FDA) has approved its remestemcel-L produce, known as Ryoncil, for the treatment of mesenchymal stromal cell therapy in the United States market. Mesoblast is now in an enviable position as being the only approved treatment provider for steroid-refractory acute graft versus host disease (SR-aGvHD) in the United States.

Investors have evidently reacted accordingly, lighting a match under this company's share price.

Perenti Ltd (ASX: PRN)

Next up, and far less dramatic, we have ASX 300 mining services share Perenti. This stock closed at $1.36 a share yesterday afternoon and opened at $1.34 this morning before climbing up to a high of $1.39 this afternoon. That's also a new 52-week high for this company.

Unlike Mesoblast, there is no big news item we can point to today that might easily explain this rise. There's been no share price-sensitive news out of Perenti for a while now. Saying that, this ASX 300 share is up a huge 14.6% or so over just the past month. As such, it seems that investors aren't ready to quell this momentum today despite the falls of the broader market.

MyState Ltd (ASX: MYS)

Last, and least (in terms of gains that is), we have ASX 300 banking and finance share MyState.

The MyState share price closed at $4.17 yesterday, opened at $4.18 this morning, and pushed up to a high of $4.26. Again, that's also a new 52-week high for this ASX 300 share.

As is the case with Perenti, there isn't any big news out of MyState today that we can point to as an obvious catalyst for this fresh 52-week high this session.

However, as we covered earlier this week, MyState has recently received some love from an ASX broker. We looked at Ord Minnett's views, which argue that MyState is a compelling investment thanks to its strong earnings growth potential and massive dividend yield.

It's possible that investors have taken note of this optimism and are bidding this ASX 300 share higher as a result.

The post 3 ASX 300 shares smashing new highs while the market dives appeared first on The Motley Fool Australia.

MyState describes itself as a diversified financial services group that consists of MyState Bank and TPT Wealth, a trustee and wealth management company.

It has been a good time to own ASX financial shares, with a number of ASX bank shares significantly outperforming the S&P/ASX 200 Index (ASX: XJO) in 2024 to date.

The ASX 200 has risen less than 10% this year, while the Commonwealth Bank of Australia (ASX: CBA) share price has gone up 39%, the Westpac Banking Corp (ASX: WBC) share price has lifted 39%, the ANZ Group Holdings Ltd (ASX: ANZ) share price has climbed 12%, and the National Australia Bank Ltd (ASX: NAB) share price has soared 21%.

The MyState share price has gone up 27% this year, and one broker believes the ASX 300 dividend stock is a buy for the year ahead.

Buy rating on the ASX 300 dividend stock

Tony Paterno from Ord Minnett has written about his positive view on the business on The Bull.

He suggested that the long-term value on offer from MyState shares is "compelling", in Ord Minnett's view.

There are a few reasons why the broker likes the ASX financial share.

First, he suggested that the business can generate "strong" earnings per share (EPS) growth.

Second, Paterno noted that the ASX 300 dividend stock has a high, fully franked dividend yield.

The third reason to like the business is due to its "competent management team".

The broker also pointed out that MyState has proposed to acquire Auswide Bank Ltd (ASX: ABA). Auswide shareholders will vote on the proposed takeover in a couple of months.

This meeting was recently postponed from 2 December 2024 to 3 February 2025.

Auswide and MyState are continuing to work with the Australian Prudential Regulation Authority (APRA) to progress the relevant applications. The two businesses expect to be able to announce the outcome of those applications in early 2025.

Tony Paterno finished his commentary on the ASX financial share with the following thoughts:

MYS is an attractive income stock and should generate capital growth from synergies in the proposed acquisition.

MyState share price snapshot

In the past 12 months, the ASX 300 dividend stock has risen by more than 30%.

According to the projections on Commsec, the MyState share price is valued at less than 12x FY25's estimated earnings with a projected grossed-up dividend yield of 8.5%, including franking credits.

The post Top broker says buy this 'compelling' ASX 300 dividend stock now appeared first on The Motley Fool Australia.

Let's look at the pain across the sector.

The Commonwealth Bank of Australia (ASX: CBA) share price is down 1.4%.

The National Australian Bank Ltd (ASX: NAB) share price is down 2.2%.

The Westpac Banking Corp (ASX: WBC) share price is down 1.3%.

The ANZ Group Holdings Ltd (ASX: ANZ) share price is down 1.3%.

The Bank of Queensland Ltd (ASX: BOQ) share price is down 1.3%.

The Bendigo and Adelaide Bank Ltd (ASX: BEN) share price is down 1.1%.

The MyState Ltd (ASX: MYS) share price is down 1.3%.

Ouch.

A decline of more than 1% today is intriguing considering some of the latest loan statistics have been released from the Australian Bureau of Statistics (ABS) which showed mixed numbers.

Investor loans have soared

The ABS' latest stats are for the monthly update for September 2024, which may be affecting ASX bank shares.

ABS reported that the total value of new housing loans fell 0.3% in the month of September to $30.2 billion after seven consecutive rises. Declines are probably not what most investors want to see.

For the month of September 2024, investor loans declined 1% month over month to $11.6 billion. However, compared to September 2023, the investor loan figure was up 29.5% year over year. It was only slightly below the record high of January 2022.

The value of owner-occupier loans rose 0.1% over the month of September 2024 to $18.6 billion, which was 13.1% higher than September 2023.

Owner occupier first home buyer loans fell 3.3% over the month of September 2024 to $5.2 billion, which was 8.8% higher than September 2023.

Falling house prices

Another reason for the ASX bank share decline may be due to a weakening sentiment in the housing market. The real estate market is a key element of banks' operations and profitability.

The latest Corelogic data was released today. It showed that over the month of October 2024, Sydney home prices were down 0.1%, and Melbourne home prices were down 0.2%. While Brisbane, Adelaide, Perth and Hobart continued with solid rises, Australia's biggest cities have the biggest impact on banks' loan books due to their larger populations.

But, Corelogic said the mid-sized capital are also losing momentum.

Sydney going into negative territory may worry investors if it's increasing the risk of future bad debts with loans. It was the first monthly fall for Sydney since January 2023, according to Corelogic.

Slower growth in home values have also been accompanied by a rise in home listing levels.

Macquarie Group Ltd (ASX: MQG) result

Investors should also keep in mind that Macquarie reported its FY25 half-year result today, which is the latest insight investors have into the banking sector thanks to Macquarie's banking and financial services (BFS) segment.

Macquarie reported its home loan portfolio reached $129.9 billion at 30 September 2024, up 9% from 31 March 2024. It now has a market share of approximately 5.6% of the Australian market. It's seemingly taking market share from other ASX bank shares.

However, Macquarie also noted that its BFS division experienced "margin compression". Bank investors don't really want to see profit margins shrink because it suggests reduced profitability and increased competition in the sector. That could be problematic for all ASX bank shares if it hurts collective profits.

The post Why are ASX bank shares falling today when investor loans have jumped 30%? appeared first on The Motley Fool Australia.

Savers can lock away their money for a period of months or years and earn interest. Typically, the longer savers are willing to give a financial institution their cash, the higher the interest rate they can receive. At the end of the term, savers are allocated their interest and can choose to receive their original sum back or carry out another term.

There are numerous ASX shares that offer term deposits including Judo Capital Holdings Ltd (ASX: JDO), Macquarie Group Ltd (ASX: MQG), Commonwealth Bank of Australia (ASX: CBA), Westpac Banking Corp (ASX: WBC), ANZ Group Holdings Ltd (ASX: ANZ), National Australia Bank Ltd (ASX: NAB), Bank of Queensland Ltd (ASX: BOQ), Bendigo and Adelaide Bank Ltd (ASX: BEN), AMP Limited (ASX: AMP) and MyState Ltd (ASX: MYS).

But even though term deposits earn interest, are they actually a good option for growing wealth?

Writing on AMP's website, Dr Shane Oliver explains why using term deposits can be a negative for some Australians.

Too conservative in early life

Oliver explained that one of the mistakes people can make that keeps them from their financial goals was being too conservative in their younger years.

The AMP expert noted that "cash and bank deposits are low risk and fine for near-term spending requirements and emergency funds, but they won't build wealth over time."

He pointed out that if $1 had been invested across various Australian assets since 1900, it would have performed quite differently.

According to Oliver, cash has returned an average of 4.6% per annum since 1900, and $1 invested at the start of the last century would be worth $263 today (including re-invested interest).

However, if $1 had been invested in Australian shares, it would have returned an average of 11.7% per annum and would now be worth $955,656 (if dividends had been reinvested).

The ASX shares' return has been achieved despite various headwinds, including World War I, the Great Depression, World War II, stagflation in the 1970s, the Global Financial Crisis (GFC), COVID-19 and the latest inflationary period.

Compound interest can help grow a dollar into a much larger amount over the long term.

Oliver also wrote:

Not having enough in growth assets early in their career can be a problem for investors as it can make it harder to adequately fund retirement later in life as they miss out on the magic of compounding higher returns on higher returns through time in growth assets like shares and property.

Fortunately, compulsory superannuation in Australia helps manage this — although early super withdrawal for various purposes (through the pandemic, for medical needs and as proposed for housing) may set this back for some.

Foolish takeaway

While term deposits definitely have their place, particularly with older Australians wanting a low-risk investment, it makes more sense for younger Australians to invest in growth assets such as ASX shares.

The post Relying on bank term deposits to build wealth? You need to read this appeared first on The Motley Fool Australia.

Four ASX shares that have failed to follow the market's lead today are listed below. Here's why they are dropping:

Australian Clinical Labs Ltd (ASX: ACL)

The Australian Clinical Labs share price is down 2% to $2.86. This morning, the ACCC revealed that it opposes the company's proposed merger with Healius Ltd (ASX: HLS). In response to the news, Australian Clinical Labs revealed that it intends to withdraw its takeover offer and cancel the extraordinary general meeting.

Meridian Energy Ltd (ASX: MEZ)

The Meridian Energy share price is down 3% to $4.85. This is despite the release of the energy company's latest monthly update, which revealed retail sales volumes in November that were 3.2% higher than the same period last year. It's possible that investors are ignoring this and simply moving funds out of risk-off assets given improving sentiment.

MyState Limited (ASX: MYS)

The MyState share price is down over 5% to $2.98. This has been driven by the release of a trading update from the bank. MyState revealed that it has taken the decision to temper its FY 2024 lending growth in response to the economic and competitive environment. As a result, it now forecasts lending growth in line with system, rather than 2 times system. It expects this to result in earnings per share falling 7.5% to 12.5% in FY 2024.

Sigma Healthcare Ltd (ASX: SIG)

The Sigma Healthcare share price is down 4.5% to 99.7 cents. Investors may be taking profit today after some very strong gains this week in response to its plan to merge with Chemist Warehouse. The Sigma share price remains up 35% this week despite today's weakness.

The post Why Australian Clinical Labs, Meridian, MyState, and Sigma shares are falling today appeared first on The Motley Fool Australia.

Silicon Valley Bank's collapse represents the largest US bank failure since the Global Financial Crisis. Time will tell how this plays out.

However, there are some All Ordinaries ASX shares that could be compelling buys this month.

MyState Ltd (ASX: MYS)

MyState describes itself as a diversified financial services business, consisting of MyState Bank and TPT Wealth, a trustee and wealth management company.

It wouldn't surprise me to see this business hit a 52-week low this week amid all the banking uncertainty.

The business recently announced its FY23 half-year result for the six months to 31 December 2022, which showed net interest income rose 21.3%, while earning per share (EPS) increased 18% to 18.6%. New to bank customers increased 54% on the prior corresponding period.

It's benefiting from the higher interest rate environment. The All Ordinaries ASX share currently offers a grossed-up dividend yield of 8.8%, which is a solid dividend return in my opinion.

The business is focused on growing its market share on a "profitable and sustainable basis", with a target of "reducing its cost to income ratio to less than 60% in the medium term and creating cumulative return on equity (ROE) and EPS growth of 30% over the next three years".

Best & Less Group Holdings Ltd (ASX: BST)

Best & Less describes itself as a leading value apparel specialty retailer with an omnichannel sales network comprising 245 physical stores and an online platform. It aims to be the "number one choice" for mums and families buying baby and kids' 'value apparel' in Australia and New Zealand, both through its own brand in Australia and Postie in New Zealand.

In an environment where household budgets are tightening, I think Best & Less could be one of the businesses that may see resilient demand, or even growth.

The business is planning to keep opening new stores to help its growth, while investing in the business in a number of ways which should help the business become more efficient in the next few years.

In the first seven weeks of the second half of FY23, the All Ordinaries ASX share saw total sales growth of 3.8%, which is useful for the company in my opinion.

Commsec numbers suggest the Best & Less share price is valued at 8x FY23's estimated earnings and 6x FY25's estimated earnings. The prediction is that the grossed-up dividend yield could be 12.9% in FY23.

Volpara Health Technologies Ltd (ASX: VHT)

Volpara says it makes software in a bid to protect families from cancer. The idea is that healthcare providers use Volpara's software to better understand cancer risk and guide recommendations about additional imaging, genetic testing, and other interventions.

The AI-powered image analysis enables radiologists to quantify breast tissue and help technologists produce mammograms.

A new US federal regulation has just been finalised by the US Food and Drug Administration (FDA) "requiring mammography facilities across the country to inform patients whether their breasts are composed of dense tissue".

Within the next 18 months, by September 2024, all patient reports and summaries must include certain language about breast density.

I think this is very positive for Volpara considering it's one of the leaders of breast screening technology in the US. This could enable ongoing average revenue per user (ARPU) growth, which is useful considering the gross profit margin is above 90%.

The business is aiming to achieve positive cash flow as soon as possible, which could be a boost for investor sentiment about the All Ordinaries ASX share. The Volpara share price is down 55% since early February 2021.

The post 3 ASX All Ordinaries shares I'm watching like a hawk in March appeared first on The Motley Fool Australia.

The key earnings generator for most of the banks on the ASX is lending. So, the interest rate can play a key role in the profitability of banks.

A bank lends money out for a certain interest rate. But, there is also a cost to the money that it lends out, such as savings accounts or term deposits. The difference between the lending rate and the cost (eg the rate for savers) is known as the net interest margin (NIM).

In 2022, we saw ASX bank shares pass on interest rate rises to borrowers much faster than savers. This is improving bank profitability, with an improvement in the NIM.

The RBA has increased the interest rate from 0.1% to 3.1% over the last 12 months. Under this environment, is the outlook for the sector promising?

Varied share price performance

Over the last 12 months, different banks have seen differing performances.

For example, the National Australia Bank Ltd (ASX: NAB) share price has managed a slight gain over the past 12 months.

Whereas the ANZ Group Holdings Ltd (ASX: ANZ) share price has dropped around 15% over the last year.

The Bank of Queensland Limited (ASX: BOQ) share price has fallen around 17% over the last year.

Of course, there are a number of other ASX bank shares to look at including Commonwealth Bank of Australia (ASX: CBA), Westpac Banking Corp (ASX: WBC), Bendigo and Adelaide Bank Ltd (ASX: BEN) and MyState Limited (ASX: MYS).

Are ASX bank shares a good opportunity?

The investment giant Blackrock recently pointed out that "higher interest rates bode well for bank profitability".

A number of banks have said they are entering FY23 with a higher starting NIM than what they experienced during FY22.

I personally don't think I would want to buy CBA shares right now because they trade at a much higher price/earnings (P/E) ratio than other banks.

But I like the direction that NAB's leadership is taking the bank in, its profit growth also seems impressive and I think the valuation looks good.

According to Commsec, the CBA share price is valued at 17 times FY23's estimated earnings, while the NAB share price is valued at 12 times FY23's estimated earnings. NAB is projected to pay a grossed-up dividend yield of 8.25% in FY23.

According to the panel of analysts that Commsec follows, only one rates NAB as a sell, while six rate NAB shares as a buy. There are also nine hold ratings.

The post Can ASX bank shares deliver in 2023 after higher interest rates? appeared first on The Motley Fool Australia.

So high conviction buy recommendations for ASX shares are becoming harder to find as Australians see their mortgage repayments increasing yet again in October.

But lucky for you, The Motley Fool has dug up a pair of stocks a Wilson Asset Management analyst is currently very much classifying as strong buys:

Booming US business could see this company grow in multiples

According to Wilson senior equity analyst Sam Koch, plumbing supplier Reece Ltd (ASX: REH) is a "high quality business" that has been very popular for a long time among fund managers.

But shockingly its share price has halved since the start of this year.

Koch said in a Wilson video that presents the perfect buying opportunity for a stock that everyone wants to own.

"The concerns around the housing market [have] really seen the valuation of this company drop to levels that are quite attractive."

In 2018, well before anyone had heard of COVID-19, Reece acquired the US business Morsco.

This is a long-term growth driver, reckons Koch.

"If you look at their strong execution in Australia, we're really backing management to be able to replicate that success into the US," he said.

"In our view, their current 200-store network size could be multiples of where it is at the moment. Reece is a strong buy for us."

Auscap Asset Management portfolio manager Tim Carleton agreed with Koch, this week naming Reece as a stock he'd happily hold for the next four years.

"We should see a very, very strong growth profile out of the US business… and really have the potential to become one of the dominant players in that space in the US in what is still a very, very fragmented market," he told The Motley Fool.

"It's a classic bottom-drawer stock [with] high-quality management, a massive opportunity, a very, very profitable business model."

Australia's east coast is its oyster

Koch also named Tasmanian bank MyState Limited (ASX: MYS) as a buy.

He likes that it has a large addressable market for future growth.

"The fact that they're based in Tasmania is actually their competitive advantage," Koch said.

"They've got the ability to grow strongly across the east coast of Australia."

To anchor the business, MyState has a very "sticky" and "loyal" deposit customer base on the Apple Isle.

"We see their ability to grow their loan book [and] expand their interest margins across a fixed cost base will drive earnings growth over the next few years."

While MyState shares are down 23% so far this year, it is paying out a handy 6.2% dividend yield.

The post 'Strong buy': Wilson analyst picks 2 ASX shares to grab right now appeared first on The Motley Fool Australia.

Westpac used to be the second biggest bank in Australia. However, the deterioration of its market capitalisation and the strength of National Australia Bank Ltd (ASX: NAB) has meant that it has slipped down the rankings.

But the market capitalisation doesn't necessarily mean one bank is cheaper than another.

One of the popular ways to compare banks is by the multiple that their earnings are valued at. This is also called the price/earnings ratio, or p/e ratio.

There are many different banks to compare on the ASX.

Westpac is one of the largest ones. NAB, Commonwealth Bank of Australia (ASX: CBA) and Australia and New Zealand Banking Group Ltd (ASX: ANZ) are the other big four banks.

Then there are a few smaller financial institutions like Bank of Queensland Limited (ASX: BOQ), Bendigo and Adelaide Bank Ltd (ASX: BEN) and Mystate Ltd (ASX: MYS).

Suncorp Group Ltd (ASX: SUN) and Macquarie Group Ltd (ASX: MQG) also have sizeable banking divisions, but they have large non-banking operations as well which makes them less comparable.

At today's Westpac share price, is it the cheapest bank?

Using the earnings estimates on Commsec, let's compare the different forward earnings multiples for FY23 – there isn't much of FY22 left, which included differing COVID-19 impacts.

The Westpac share price is valued at 12x FY23's estimated earnings.

Other banks

CBA shares are currently valued at 18x FY23's estimated earnings.

The NAB share price is valued at 13x FY23's estimated earnings.

ANZ shares are valued at 11x FY23's estimated earnings.

So, of the big four ASX banks, Westpac is not the cheapest. But it is the second cheapest on the projected earnings side of things.

But what about the smaller banks?

The BOQ share price is valued at 10.6x FY23's estimated earnings, so it's a little cheaper than ANZ.

Bendigo Bank shares are priced at 12x FY23's estimated earnings.

The Mystate share price is valued at 12x FY23's estimated earnings.

Is the Westpac share price a buy?

It may not be the cheapest bank on the ASX, but analysts can still rate the business as a buy.

Brokers are pretty mixed on the bank at the moment. For example, Morgans and UBS both rate Westpac as a buy, with price targets of $29.50 and $27 respectively. That implies a potential upside over the next year of 34% and 23%, respectively. Both of these brokers say that Westpac is their favourite bank.

However, others are less convinced. The broker Morgan Stanley only rates Westpac 'equal-weight' because of uncertainty about the revenue, with a price target of just $22.20 – that's only slightly higher than where it is right now. But, it did note the start of Westpac's cost reduction actions.

Credit Suisse is another broker that is 'neutral' on the bank with a price rating of $23. That would imply a mid-single-digit rise for the Westpac share price.

The post Is the Westpac (ASX:WBC) share price the cheapest bank to buy right now? appeared first on The Motley Fool Australia.

For example, Westpac Banking Corp (ASX: WBC) shares have lost 15% over the past month, while the market turned on former darling Commonwealth Bank of Australia (ASX: CBA), shaving 10% off in the past week.

But with economic activity expected to pick up as the country moves beyond COVID-19 lockdowns, there will be no shortage of work for the finance sector.

Here are a pair of ASX shares that Wilson Asset Management analysts have singled out as 'buy':

The Tasmanian coming over to the mainland

With a market capitalisation of $512 million, MyState Limited (ASX: MYS) is definitely small fish compared to the big four banks.

Wilson equity analyst Sam Koch said the Tasmanian ASX share is starting to ramp up its presence on the east coast of the mainland.

"We recently participated in a capital raising the business did. They're looking to deploy those proceeds in a way that could grow their loan book over time," he told a WAM YouTube video.

"We think it could almost double their loan book over the next couple of years. MyState's a buy."

MyState shares have remained flat this year, just up 0.21% since the New Year's fireworks.

ASX share going gangbusters in the US

Senior investment analyst Shaun Weick would buy Credit Corp Group Limited (ASX: CCP) right now.

Similar to MyState, shares for the debt buyer have remained flat in 2021, rising just 1.1%.

According to Weick, purchased debt ledger (PDL) volumes "have been depressed" in recent times due to the coronavirus pandemic.

"But we think as the economy reopens and the stimulus benefits unwind, you will see it pick up in credit growth activity."

The analyst also thought Credit Corp leadership has done well to triple its "flow share" in the US market during the pandemic period.

"As those volumes recover, we can see a very strong growth trajectory for that US business — so we've got that one as a 'buy'."

Wilson Asset Management is not the only one high on this ASX share. Earlier this month, Ord Minnett slapped on a price target of $32 for the stock.

Credit Corp shares closed Tuesday at $31.15.

The post 2 financial ASX shares to buy right now: experts appeared first on The Motley Fool Australia.

According to reporting by The Sydney Morning Herald, research by the University of NSW has revealed that the percentage of households in mortgage stress has risen to 42%.

This mortgage stress evaluation is based on how much money households have after their normal expenditure (including housing) compared to their income. Households with less than 5% left are deemed to be "stressed". Ones with a deficit of more than 5% are "severely stressed".

The research is based on 52,000 households that are either paying a mortgage or paying rent. It shows that just under 33% were in stress in February 2020, it has now risen to 41.7%. Sydney and Melbourne are the places where stress is particularly popping up. Investors are also reportedly facing increased stress with their loans. This could apply to plenty of the borrowers at CBA, Westpac, ANZ and NAB considering their overall market share of the mortgage market.

What does the RBA think is the problem?

Low interest rates are widely acknowledged to be a factor for increasing asset values, not just housing.

However, the RBA also pointed to how property investment is encouraged by the tax system and it also leads to people not moving and selling. Examples included the capitals gains tax concession and how the principal place of residence is excluded from the age pension means test.

The SMH referred to the RBA's submission to a parliamentary inquiry into housing affordability, which mentioned negative gearing:

However…the RBA believes that there is a case for considering the tax system in a holistic way, taking into account the interaction of negative gearing with other aspects of the tax system.

The housing market is a big deal for the big four ASX banks

CBA, Westpac, ANZ and NAB all earn a large amount of their profit from loans to households and property investors.

This report of increasing household stress may not be a good look when it comes recently after UBS' survey showed that a record number of loan applicants were not being truthful on their applications relating to the income, expenses or financial liabilities.

The big four ASX banks aren't the only ones that need to keep an eye on mortgage stress. There are other ASX shares involved in mortgages including Bank of Queensland Limited (ASX: BOQ), Suncorp Group Ltd (ASX: SUN), Bendigo and Adelaide Bank Ltd (ASX: BEN) and MyState Limited (ASX: MYS).

It will be interesting to see if anything comes of this mortgage stress. Some banks like ANZ have been launching share buy-backs and releasing credit from their provisions for potential bad debts. Mortgage stress may not necessarily lead to bad debts for the banks considering the high level of house price growth over the last 12 months.

The nationwide COVID-19 vaccination effort may also open up numerous economic sectors so they can get back to earning again.

The post Climbing mortgage stress: Are the CBA, ANZ, NAB and Westpac share prices in danger? appeared first on The Motley Fool Australia.

Australia's housing generates a lot of economic activity across a broad range of industries, including on the ASX.

Some of the ASX's biggest businesses, the major banks, are heavily involved with property. This refers to Commonwealth Bank of Australia (ASX: CBA), Westpac Banking Corp (ASX: WBC), Australia and New Zealand Banking Group Ltd (ASX: ANZ) and National Australia Bank Ltd (ASX: NAB). Mortgages make up a large amount of the loan book which can be seen in CBA's FY21 result presentation (and the others).

Other ASX banks also have a very sizeable exposure to the housing market like Bank of Queensland Limited (ASX: BOQ), Suncorp Group Ltd (ASX: SUN), Bendigo and Adelaide Bank Ltd (ASX: BEN), Macquarie Group Ltd (ASX: MQG) and MyState Limited (ASX: MYS).

There are also property portal websites and mortgage brokers like REA Group Limited (ASX: REA), Domain Holdings Australia Ltd (ASX: DHG) and Australian Finance Group Ltd (ASX: AFG).

The housing market also provides fuel for plenty of businesses that supply building supplies or household items for customers. Some of the many examples include Wesfarmers Ltd (ASX: WES), Metcash Limited (ASX: MTS), Brickworks Limited (ASX: BKW), CSR Ltd (ASX: CSR), Nick Scali Limited (ASX: NCK), Harvey Norman Holdings Limited (ASX: HVN), JB Hi-Fi Limited (ASX: JBH) and so on.

So, the health, strength and sustainability of the housing market has far-reaching impacts.

What is happening with 'liar loans'?

According to the latest survey done by the investment bank UBS, there is now a record number of liar loans, as reported by various media including the ABC.

Of the approximately 900 people that took on a mortgage over the last 12 months, just over 40% of these applications "were not completely factually accurate".

Readers may wish to know that this is the highest level of 'liar loans' since UBS started doing this survey and analysing the result in 2015 (when liar loans made up 27% of the total). Last year the percentage was 38%.

Allegedly, the things that people were most 'not entirely truthful' about were: not disclosing their full living costs (just over a third), not fully disclosing financial commitments (at 28%) and including rosier-than-reality income figures (at 22%).

According to the ABC, UBS said that the debt-to-income ratio on mortgages was a record. The stats show that 21.5% of loans were to people that had a debt to income ratio of at least six times. UBS said:

Amid home prices booming 18.3 per cent year-on-year (highest since 1989), we think borrowers are 'chasing the market' and stretching towards their capacity limit to be able to qualify.

The status also showed that property investors were more likely to spruce up their application (above 50%) compared to people who were buying to live in the property (31%).

How is the housing market going?

Time will tell if this has an impact on borrowers that have overstretched themselves, or the market as a whole. It will also be interesting to see if the regulators decide to step in or not at some point. There is not much talk of Australian Prudential Regulation Authority (APRA) or the Reserve Bank of Australia (RBA) doing anything for now.

The latest CoreLogic national home value index showed that national prices climbed 1.5% over August 2021 and the prior 12 months showed a 18.4% increase of property prices.

The post Could liar loans crash the housing market? appeared first on The Motley Fool Australia.