It's been a very tough week for big bank shareholders…
Every one of the Big Four banks have fallen hard. The worst, Commonwealth Bank of Australia (ASX: CBA), is down more than 7.1%.
Whilst only falling 2.8% this week, shares of Australia and New Zealand Banking Group (ASX: ANZ) are down a whopping 10.5% in the past month alone.
Following Westpac Banking Corp's (ASX: WBC) poor results on Monday and National Australia Bank Ltd's (ASX: NAB) hard-to-swallow profit figures this morning, ANZ is actually the only big bank to have reported decent results.
However, they weren't great results by any means.
…and when a stock is trading at a very rich valuation, like ANZ is, investors can sometimes be merciless in selling it down.
Indeed although ANZ's headline profit figure was slightly ahead of expectations, there are signs the good times could be coming to an end.
Firstly dividend growth was below expectations.
The bank's net interest margin (a key measure of profitability) fell meaningfully lower to 2.04%, from 2.15% a year earlier.
Return on equity fell from 15.5% to 14.7%. Return on assets also fell.
Meanwhile, the bank's operating expense ratio jumped to 45.1% from 44.3%.
Then there was the bank's outlook, which said the future will be characterised by a "lower growth environment."
Should you buy ANZ shares?
Now is not the time to buy ANZ shares. Despite its share price falling 10% this past month there are a number of headwinds which lay ahead of our big banks and with share prices in many of them still quite expensive, they may yet fall further.
