We update the analysis we did previously (here) to review lessons learned from previous banking incidents, including CBA’s 2017AUSTRAC case and NAB’s 2004 irregular foreign currency options trading issue. We find: 1. In all cases, banks underperform peers in the 12 months after the incident by an average of 18%, 2. Generally, underperformance in the first 3-4 months has been driven by multiple contraction, and thereafter EPS downgrades drive stock underperformance, 3. Share price volatility continues for at least60 trading days after the announcement of the event.
Underlying message: no need to rush into buying
WBC Price at posting:
$24.95 Sentiment: None Disclosure: Not Held
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