The view from Wall Street: Australian bank stocks

Shares have been depressed by capital raisings and dividend worries but valuations look cheap.

Summary: Macquarie says Australian bank stocks are trading at earnings multiples not seen “in years” and predicts stock-pickers will be drawn to the banks over the next few weeks for the dividends. UBS also remains upbeat, with the caveat that Australia doesn’t slip into a deep recession. But Morgan Stanley warns of the prospect of rising loan losses, higher funding costs and dividend cuts.

Key take-out: Through Australia’s good times the country’s banks were market darlings. They now need to show they’ve got what it takes to muscle through the bad times.

Key beneficiaries: General investors. Category: Bank shares.

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