Economics & Markets

Aussie banks are OK but there’s better value overseas

By AMP Capital

Banks globally are better value than local banks for share market investors but our “big four” still don’t look overvalued, says Shane Oliver, AMP Capital head of Investment Strategy and Chief Economist.

“Going forward in an absolute sense the banks look ok. P/Es [price earnings] multiples are a little under the market average multiples in Australia and dividend yields are still good.

“There is a bit of a risk if the housing market turns down sharply but I’m not in the camp that says we’re going to see a housing crash,” Oliver explains.

However, in a relative sense, banks in other parts of the world – in Europe and in the United States in particular – represent much better value for investors, Oliver says.

“Simply for the reason they’ve been out of favour for the past few years. Don’t forget the GFC [Global Financial Crisis] badly whacked US banks and the Eurozone crisis badly whacked European banks,” he says.

“I reckon going forwards those banks [in Europe and in the United States] will start to recover and that’s where the value is if you want to see good growth going forwards.

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Important notes

While every care has been taken in the preparation of this article, AMP Capital Investors Limited (ABN 59 001 777 591, AFSL 232497) and AMP Capital Funds Management Limited (ABN 15 159 557 721, AFSL 426455)  (AMP Capital) makes no representations or warranties as to the accuracy or completeness of any statement in it including, without limitation, any forecasts. Past performance is not a reliable indicator of future performance. This article has been prepared for the purpose of providing general information, without taking account of any particular investor’s objectives, financial situation or needs. An investor should, before making any investment decisions, consider the appropriateness of the information in this article, and seek professional advice, having regard to the investor’s objectives, financial situation and needs. This article is solely for the use of the party to whom it is provided and must not be provided to any other person or entity without the express written consent of AMP Capital.

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