Australia's big four banks are set to unveil a "relatively weak" set of numbers when they announce their 2015-16 first-half results in the first week of May, according to UBS.
In an Australian banking sector update titled 1H16 Result Preview - Under pressure, UBS said the banks have a condensed reporting season in 2016 with results likely to be "noisy".
The major factors contributing to the noise will be ANZ's continuing restructure of its international and institutional business; NAB's reporting of pro forma numbers for the Clydesdale demerger; and Westpac's provision of new divisional disclosures, said UBS.
Overall results for the banking sector will be "relatively weak", according to UBS, with earnings per share expected to be down 4.1 per cent sequentially.
Of key interest to analysts will be the expansion of net interest margins, which have been impacted by mortgage repricing and will be offset by funding costs, lower rates and front-book competition, UBS said.
Credit growth could be one ray of light for the banks, while fee income is likely to be restrained by lower interchange fees and markets revenue.
Bad and doubtful debts in high-profile exposures such as Arrium, Slater & Gordon and Dick Smith should be conservatively provided for, UBS added.
"Banks which are perceived to have inadequately provided for these well-known positions are unlikely to be rewarded by the market," said the report.
Westpac will be the first bank to release its result on Monday 2 May, followed by ANZ on Tuesday 3 May, NAB on Thursday 5 May and CBA on Monday 9 May.
Economists agree that the Reserve Bank is likely to remain in inflation fighting mode until December. ...