WBC has struggled this year, declining -8.7%, a significant difference to ANZ. Their recent trading update gave no reason to anticipate any changes on the relative performance front, with core NIM of 1.86%, down 4bps from 1H23. Market concerns with WBC remain centered around the delivery of cost out and asset sales, increasing funding and the sustainability of recent growth in mortgage lending. However, the stock is close to trough valuation multiples, hence we believe most of the underperformance is behind us, but the market may not have fully priced in anticipated cost over runs and ROE compression – it’s easy to leave alone at this stage.
- We see no reason to switch/reweight our banking exposure to WBC at this stage.
MM is neutral on WBC
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