Ahead of the investor briefing, Credit Suisse reiterates a Neutral rating and $6.05 target. The broker believes there are a number of factors that make entry into banking and the sale of term deposits attractive.
Firstly the addressable market is significantly larger and there appears to be a capital arbitrage opportunity. The term annuity portfolio has also contracted around -20% over the last 18 months, creating the need for a replacement.
The steepening of the yield curve could also push term annuity sales to longer duration, which is more favourable with a bank than a life company.
Sector: Diversified Financials.
Target price is $6.05.Current Price is $5.56. Difference: $0.49 – (brackets indicate current price is over target). If CGF meets the Credit Suisse target it will return approximately 8% (excluding dividends, fees and charges – negative figures indicate an expected loss).