I agree on the stupidity of raising equity 2 years ago at $14 odd (can’t remember exact figure) only to buy back shares $30. Especially when they were the only bank who raised equity at fire sale prices.
However, you’d need a severe housing meltdown to see the banks in trouble. The banks have the equity to absorb a material fall in house prices, they are required so by the capital adequacy ratios which are good in this county. However, on top of this we have minimum, a 20% buffer or more on a net basis for equity on top of bad debts. It’s not all doom, not to say it can’t happen. House prices are in a massive bubble, but again a major correction would only take the froth away from the last 2 years. A large portion of mortgages are pre this period, thus insulated.
I still see house prices going down 15%, but I don’t think it’s a negative impact to banks at this point.
NAB Price at posting:
$31.66 Sentiment: Buy Disclosure: Held
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