Thursday February 19, 06:41 AM
Australia shares rise 1.1 pct; banks offer support
By Koh Gui Qing
SYDNEY, Feb 19 (Reuters) - Australian shares rose 1.1 percent
on Thursday, led by banks such as Westpac as investors
bet they can keep bad debts in check while holding up earnings as
they gain market share.
Shares in Australia's four largest banks all rose above 1
percent, pushing the benchmark S&P/ASX 200 up 35.7 points
to 3,448.9.
New Zealand's benchmark NZX 50 index traded down 0.2
percent at 2,616.9.
'With this reporting season, all of the banks are trying to
get their skeletons out of the closet and assuming everything is
above board, they look relatively healthier than their peers,'
said Ben Potter, an analyst at IG Markets Ltd.
Westpac Banking Corp (Frankfurt: 854242 - news) , Australia's No. 2 bank, led
gains with a 3.2 percent gain to A$17.00. It posted steady
profits on Wednesday as higher revenue and fee income offset a
five-fold jump in bad debts, boosting investors' hopes about
Australian banks.
Australian banks, which have among the highest credit ratings
in the world, have survived the meltdown in global financial
markets better than their peers because they are not heavily
exposed to sub-prime debt.
Some analysts said the financial crisis has also allowed
Australian banks to grow their market share at home as their
foreign rivals struggle to stay in the market. This could boost
their revenues as they gain more pricing power.
Commonwealth Bank of Australia (Munich: 882695 - news) , the No. 3 bank, rose
2.4 percent to A$29.85. National Australia Bank (Berlin: NAL.BE - news) , the No.
1, added 1.4 percent to A$18.40, and fourth-ranked Australia and
New Zealand Banking Group was up 1.6 percent at A$12.60.
Still, some analysts said banks cannot escape the effects of
a slowing Australian economy that is just skirting a recession,
because more firms will struggle to pay their bank loans.
'We do not believe that top line will remain robust, as loan
demand weakens, so will net interest income as well as associated
fees,' CLSA said in a note to clients.
CLSA has an 'underweight' rating on Australian banks.
Moody's said on Thursday it will reassess its ratings of
Australian banks as the global economy deteriorates.
Among other top movers, global miner BHP Billiton (LSE: BLT.L - news)
Ltd slipped 0.5 percent to A$30.16 as analysts said some
investors were selling BHP shares to buy those of its rival Rio
Tinto, which is more attractively valued.
Rio, which wants to sell $19.5 billion in assets and bonds to
China state-owned aluminium group Chinalco to pay off debts, rose
2.4 percent to A$51.78.
BHP shares trade at 10.2 times its estimated 2009 earnings,
compared to Rio's 8.3 times, Reuters data showed.
Property trust GPT Group leapt 20 percent to A$0.54
as some traders bought back shares to cover their short positions
on the stock, which has lost a fifth of its value in the last
week before Thursday's rebound.
Shares in broadcaster Ten Network Holdings Ltd
dropped 14 percent A$0.80 after it decided not to proceed with a
plan to sell 120 million new shares.
(Editing by Jonathan Standing)
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