jpmorgan warnns about anz first wave

Keep telling yourselves the worst is over, keep telling yourselves ANZ is a good buy in the 5-10 year time frame, keep telling yourselves that ANZ has any hope of meeting its expansion goals in Asia, keep telling yourselves that Opes, Chimera, Prime etc are just one offs and the bottom is in, keep telling yourselves that the debt supercycle will leave ANZ (with $47B in notional credit default swap exposure) un effected by further downturns in the US market, keep tellin yourselves that ANZ with 10 times the derivative exposure of CBA (47B vs 5B)is safe because it holds its counter party exposure with well diversified counter parties (or even better most of its with Aust counter parties), keep telling yourselves, keep telling yourselves that further monoline credit downgrades hold no peril for ANZ , keeping telling yourself that ANZs dividend and earnings offer an attractive compelling investment case and that their future earnings are safe and sound, keep telling yourself all this stuff and dont listen the detractors, as the evidence racks up stay the course, tell yourself "there wont be a global credit default meltdown" these facts (sorry folks) just have an axe to grind, whatever you do dont listen to anyone with anything bad to say , whatever you do dont listen to the folks from JP Morgan when they warn

"real risk that these troubled loans are the first wave of a new loan-loss cycle for Australian banks given that only a small proportion of business borrowers will have thus far faced the burden of sharply higher lending rates."

keep telling yourself all this stuff every day, until the day something comes along that shakes all those comforting things you told yourself away and you realize that all the stuff you were telling yourself was just a state of denial.


0903 [Dow Jones] JPMorgan says ANZ Bank's (ANZ.AU) estimated "troubled companies" exposure climbed to around A$3.082 billion after company said it has a A$260 million secured exposure to Chimaera's Primebroker division, for which it expects to take a A$50 million provision. Also notes that Commonwealth Bank's (CBA.AU) estimated exposure to troubled companies sits at A$2.515 billion, National Australia Bank (NAB.AU) at A$1.832 billion, Westpac (WBC.AU) at A$1.16 billion and St. George at A$581 million. "Thus far, the default setting of most investors is that these single-name exposures are one-offs; however, we note that the balances involved are not small and the list is growing," analyst says. Says while banks are on the lookout for potentially problematic loans, there is a "real risk that these troubled loans are the first wave of a new loan-loss cycle for Australian banks given that only a small proportion of business borrowers will have thus far faced the burden of sharply higher lending rates." (LMF)