Following our assessment of results and market announcements, here are our two top picks for today (Wednesday 15 August 2018):
National Australia Bank (NAB) – comforting update
NAB announced unaudited cash earnings of $1.65bn for the Jun-18 quarter. We have reduced our cash earnings per share forecasts by 1-2% due to lower Net Interest Margin forecasts. We now expect an additional regulatory/compliance provision charge of $140m post-tax in 2H18F, however we are excluding this from our cash earnings basis.
We have revised our share price target but maintain our Add recommendation (Morgans clients can login to view the revised share price target and detailed research note).
Australian Finance Group (AFG) – regulatory risk is fading
Since we published our last research note on AFG there have been two significant developments:
- Public release of Treasury's submission on key policy issues to the Royal Commission; and
- Public release of the Productivity Commission's final report into Competition in the Australian Financial System.
We believe that when these two releases are considered in conjunction, they support our views on the outlook for mortgage broker remuneration. The notion of switching mortgage broker remuneration to a fee-based model looks to be all but dead. In our view, Treasury and the Productivity Commission have the commercial viability of mortgage brokers front of mind.
We retain our Add recommendation (Morgans clients can login to view our share price target and detailed research note).
Morgans clients can access our further analysis in our latest reports on National Australia Bank and Australian Finance Group. Alternatively, please contact your nearest Morgans office for access.
Disclaimer: The information contained in this report is provided to you by Morgans Financial Limited as general advice only, and is made without consideration of an individual's relevant personal circumstances. Morgans Financial Limited ABN 49 010 669 726, its related bodies corporate, directors and officers, employees, authorised representatives and agents (“Morgans”) do not accept any liability for any loss or damage arising from or in connection with any action taken or not taken on the basis of information contained in this report, or for any errors or omissions contained within. It is recommended that any persons who wish to act upon this report consult with their Morgans investment adviser before doing so.