Summary: Our top five companies are yielding around six per cent. The banks face significant threats including disruptive players, the possibility that something will go wrong with the housing market and the need to hold more capital. The banks are reducing costs by lowering deposit rates and investing in technology. BHP Billiton is also reducing costs and cutting back its capital expenditure.
Key take-out: When you buy bank shares at the current levels you are making the assumption that Australia will not encounter a major reverse in its economy.
Key beneficiaries: General investors. Category: Shares.