The Commonwealth Bank of Australia (CBA) led stocks higher yesterday after the lender reaffirmed its financial strength and its wealth management arm Colonial First State (CFS) grabbed more market share.
The Sydney-based bank’s shares rose the most since March, adding $1.96 or 5 per cent to $40.90.
The S&P/ASX 200 climbed 1.3 per cent to 5307 points and bank shares Westpac Bank, ANZ Banking Group, National Australia Bank, Bank of Queensland and Bendigo Bank also rose in trading.
“After the significant share price declines from the October [and] November peaks . the sector is once again starting to exhibit good value,” Bell Potter director of research Peter Quinton said.
CBA had no additional plans to raise capital, CBA’s chief financial officer David Craig told the market yesterday.
The bank’s lending book remained sound and the CFS FirstChoice financial platform controlled 9.61 per cent of the advisory market, up from 8.39 per cent a year ago, he said.
CBA’s tier one capital ratio, a gauge of its ability to absorb losses and bad debts stood at 8.17 per cent, the highest of the Big Four.
Banks should have a tier one capital ratio of above 8 per cent in order to remain well-capitalised according to Australian Prudential Regulatory Authority standards.
“My favorite bank is probably Westpac, then CBA although there is some evidence that their lending quality has dropped off,” Bell Potter’s Quinton said.
“ANZ would be third. But a long, long way behind those three is National Australia Bank.”
Banking stocks across the world would “fly” as it was likely that the United States government would soon intervene into the sub-prime crisis and stop it from getting worse, Quinton said.
