in the next 4 weeks the spot light goes on the ban Friday 22...

in the next 4 weeks the spot light goes on the ban Friday 22 October 3:30 PM


Australia's National in bank results spotlight
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By Daniel Morrissey

SYDNEY, Oct 22 (Reuters) - Five of Australia's six biggest banks report results over the next four weeks with the National Australia Bank Ltd. (ASX: NAB) in the spotlight after a foreign exchange scandal, top-level resignations and profit warnings.

A Reuters poll of analysts' forecasts is below.

ANZ Banking Group Ltd. (ASX: ANZ), St George Bank Ltd. (ASX: SGB) and Westpac Banking Corp. (ASX: WBC) are all expected to report solid earnings as the country's 14th consecutive year of economic growth fuels demand for credit and keeps bad debts low.

But investors said the scant explanations from the National, the country's biggest bank, for its profit downgrades earlier this year have raised concerns about its underlying performance. "NAB is a particular sort of circumstance where I am looking for explanations to what the hell's gone on," said fund manager Tyndall Investment Management analyst Craig Young, echoing concerns raised by other fund managers and sell-side analysts.

"Up until about a year ago NAB looked like it was a good bank, it looked like it was well run and the numbers it was putting out were pretty reasonable, pretty good in fact. That's why it seems such a shock these last few profit downgrades."

Costs rose in Australia as National defended its franchise to retain customers. Overseas, it is gauging buyer interest in its struggling Northern Ireland and the Republic of Ireland banks, while its Scottish and English banks lack critical mass.

The new chief executive has his hands full, but John Stewart, a no-nonsense Scotsman, knew what he was getting into on his appointment in February in the wake of the rogue foreign currency trades that cost the bank A$252 million ($184 million).

"I'm here for the war, not the peace," he said.

Just five months later Stewart, who used to head up the National's UK operations after a stint as a senior executive at Barclays Plc. BARC.L, issued a profit downgrade and said it would take up to two years for the National to fully recover.

Analysts forecast the National to report a 14.8 percent fall in cash earnings before one-off items to A$3.467 billion in the year to Sept. 30 from A$4.07 billion in the previous year, according to the median of a Reuters poll of seven analysts.

This would represent a fall of 21 percent in second half cash earnings to A$1.617 billion from A$2.043 billion for the same half in the previous year as costs rose in its Australian division and competition bites into its Irish and UK banks.

Broker reports are mixed on fiscal 2005. Based on the fiscal 2004 median of the Reuters poll, some analysts are forecasting as much as a 6 percent fall in fiscal 2005 cash earnings, while some analysts are tipping as much as a 5.4 percent rise.

Shares in the National have fallen more than 7 percent this calendar year and the stock has underperformed the benchmark S&P/ASX 200 Index .AXJO by about 18 percentage points.

ST GEORGE OUTPERFORMS

St George, the country's fifth largest bank by market value, has the best performing share price among the top six banks. It has outperformed the benchmark index, which touched a record high on Oct. 13, by 3.7 points. Westpac's shares have pipped the index by 1.5 points, while ANZ has trailed by about 1.6 points.

Among the other banks, ANZ is tipped to report about an 8.7 percent rise in year cash earnings per share. Its profits will be boosted by the acquisition of the National Bank of New Zealand in October last year. Westpac's year cash earnings per share are tipped to rise 10.8 percent, according to the Reuters poll.

St George's earnings are forecast to rise 13 percent.

"In terms of the banks generally the results shouldn't hold any surprises. It will actually be the outlook that will get more focus than the result," Tyndall's Young told Reuters.

Investment bank Macquarie Bank Ltd. (ASX: MBL), the country's sixth largest bank by market value, reports its first-half results and analysts forecast a 6.7 percent rise in net profit.

Shares in Macquarie, which said last month it was confident of beating last year's first half results, hit a record high of A$40.71 on Oct. 21. The stock has trailed the index by 1 point.

FULL YEAR NET PROFIT AFTER TAX FORECASTS

Date Average Median Range 2003

(A$ bln) (A$ bln) (A$bln) result ANZ 26/10 2.751 2.753 2.703-2.776 2.348 St George 1/11 728 728 719-734 606 Westpac 8/11 2.537 2.536 2.520-2.572 2.183 National 10/11 3.858 3.939 3.352-3.970 3.955 Macquarie* 16/11 272.3 272 265-279.9 255 *half year

FULL YEAR CASH EARNINGS PER SHARE FORECASTS

Average Median Range 2003 P-E

(cents) (cents) (cents) result ANZ 158.9 158.9 155.2-162.2 146.2 12.37 St George 161.1 161 160-162.8 142.2 14.22 Westpac 137.9 138 137.3-139 124.5 13.13 National 224.1 224.3 211.8-231 268.5 12.32 Macquarie* 117.7 118.1 114.9-120 116.2 17.21 *half year/basic earnings per share (Notes: cash earnings are before significant one-off items. Seven analysts were polled. The Macquarie estimate is based on three forecasts. Commonwealth Bank of Australia Ltd. CBA.AX, the country's second biggest bank, has a June 30 financial year)