Retail punters ignore bank analysts

The prospect of yet another bumper profit season for the big four banks continues to leave investors salivating for more.

With three of the big four to begin reporting tomorrow, with ANZ (ANZ) kicking of proceedings with estimates of a 10% earnings lift and forecasts of improved dividends, investors continue to pour money into the big four banks.

While the vast majority of analysts believe the banks have run too hard and now are overpriced, retail investors appear unperturbed.

After strong gains from the opening bell, each of the big four ended the morning session holding serious advances with ANZ up 1.8%, NAB (NAB) rising 1.6%, Westpac (WBC) ahead 1.1% and Commonwealth (CBA) bringing up the rear with a 0.9% gain to a record $77.02.

The solid gains helped drive the Australian market to five year highs with the ASX 200 up 59.95 points to 5,446 by midday.

After Suncorp's (SUN) recent special dividend, there is speculation that Westpac in particular will also similarly reward shareholders when it reports next week while ANZ and NAB this week are expected to lift their final payouts to around 89c.

Combined, the big four are expected to deliver more than $27 billion in combined earnings during a time when lending growth has struggled to remain above all time  lows and business lending in particular has sagged.

Analysts have been calling the Commonwealth Bank a sell for most of this year. But its attractive yield, along with the other banks, has seen retail investors overwhelmingly ignore the advice given the trend for all the banks to lift payout ratios and as continued falls in bad and doubtful debts drive earnings and dividends higher.