Credit Suisse feels the capital certainty is a positive for the banking sector, after APRA released its final capital adequacy and credit risk capital requirements for deposit-taking institutions.
Compared to the 2020 consultation, capital standards have been slightly watered down with ‘unquestionably strong’ to be set in
regulation at 10.25% for the major banks, explains the broker. However, APRA’s expectation is that that banks hold a buffer around 11%.
The high risk mortgage definition was also narrowed to interest only and a loan-to-value ratio (LVR) of greater than 80%. The Neutral rating and target price of $28.50 for ANZ Bank are retained.
Target price is $28.50.Current Price is $27.14. Difference: $1.36 – (brackets indicate current price is over target). If ANZ meets the Credit Suisse target it will return approximately 5% (excluding dividends, fees and charges – negative figures indicate an expected loss).