The Credit Suisse report said NAB should “disproportionately benefit from a larger, more efficient business financing market, with its dominant place in small business lending in Australia”.
NAB currently has a market share of around one third, which Credit Suisse said will allow the bank to manage any new competition in the market.
“At a stock level, we see the likely clear winner from the inquiry to be NAB (followed thereafter by ANZ) with the relatively large Australian mortgage banks CBA and Westpac being relative (if not outright) losers,” said the report.
The report argued NAB was better positioned than its peers to adopt dynamic provisioning and absorb a reduction in standardised mortgage risk weights, which were both explored as policy options in the interim report.
Credit Suisse said ANZ will be the next biggest beneficiary from the FSI.
Credit Suisse also noted the FSI’s proposal to allow listed issuers to issue ‘vanilla’ corporate bonds directly to retail investors to help create a “deeper and more liquid corporate bond market”.
“ANZ should disproportionately benefit from a larger corporate bond market, given its capital markets financing emphasis within its Asian business and its strength in the middle market lending market,” said the report.
While CBA and Westpac will certainly benefit from the growth in the business financing market, the report argued they could be “somewhat vulnerable given the relatively large size of their Australian balance sheets and the strong skews in their global balance sheet compositions to Australian mortgages”.
