ASX 200 bank shares are steamrolling the market in 2024. It seems like every day a new share price milestone is set by at least one of the Big Four banks.
On Thursday, three of them did just that.
In a new update, the portfolio managers of Blackwattle's Large Cap Quality Fund, Ray David and Joe Koh, explain why our bank stocks are doing better than some of their global counterparts.
But first, let's get you up to speed on the latest skyrocketing share prices.
3 of the Big 4 ASX 200 bank shares set new milestones today
National Australia Bank Ltd (ASX: NAB)
The NAB share price hit a nine-year high of $38.08 today. The only news out of NAB is a daily update on its share buyback program. The update advises investors of the on-market purchase of 406,899 NAB shares yesterday as part of a buyback program that commenced in August 2023.
NAB has now bought back almost 52.74 million shares. The buyback is due to end on 1 May 2025.
Westpac Banking Corp (ASX: WBC)
Westpac shares rose to a new 52-week high of $28.65 in intraday trading today. The ASX 200 bank share has not traded at this level since November 2019.
Westpac also released a daily update on its own share buyback program today. The update advises investors of the on-market purchase of 265,730 Westpac shares yesterday. The ASX 200 bank has bought back 47.36 million shares since the buyback began in November. It is due to end in November this year.
ANZ Group Holdings Ltd (ASX: ANZ)
The ANZ share price hit a seven-year high today at $30.23 apiece. And once again, the only news out of this ASX 200 bank today was a daily update on its share buyback program.
The update advises that ANZ bought 727,540 shares yesterday as part of its buyback program that commenced in May. The bank has bought back 4.61 million shares so far. The buyback will run through to May next year.
Commonwealth Bank of Australia (ASX: CBA)
Last Friday, Australia's biggest bank overtook mining behemoth BHP Group Ltd (ASX: BHP) to become the biggest ASX 200 company by market capitalisation.
The ASX 200 bank share simply keeps resetting its all-time price high. It happened again yesterday when CBA shares peaked at $134.25 apiece during intraday trading.
There is no news out of CBA today.
Why ASX 200 bank shares are doing better than global peers
Ray David and Joe Koh from Blackwattle say our bank shares are outperforming the ASX 200 and doing better than some of their global counterparts for two uniquely Aussie reasons.
They say the banks' outperformance is being driven by optimism that bad debts will stay at cyclically low levels and also because of ongoing share buybacks.
As we outlined above, three of the Big Four ASX 200 bank stocks are conducting buybacks now.
In a newly published update, David and Koh said:
This optimism contrasts with the experience of UK and Canadian banks, where investors have been more concerned about rising bad debt levels and soft economic conditions.
While bad debt levels in Australia are minimal, savings rates have plummeted, and credit card debt is growing again. For bad debts to remain at cyclical lows, interest rate reductions will be needed, or earnings are likely to come under pressure.
That said, skyrocketing Australian house prices continue to provide mortgage holders with a buffer and an ever-growing source of wealth, thanks to record migration and a housing undersupply.
The managers use CBA shares as a case study in terms of outperformance compared to global peers. They said:
For the year, Commonwealth Bank (CBA) delivered investors a 32% return compared to the ASX 200's 12%. This outperformance was entirely driven by the PER valuation increasing from 17x to 22x.
Compared to JP Morgan (JPM) at 12.8x PER or Lloyds Banking Group (LLOY) at 9.0x PER, this makes CBA one of the most expensive banks in the world.
