FY21 guidance was optimistic and provides for broadly flat jaws with circa 2% cost growth.
With revenue increasing by circa 2.5% in the second half, management believes momentum is building and expects "above system" loan growth. Margin decline is expected to be circa 2-4bps.
To achieve a loan growth of circa 6%, Morgan Stanley thinks the bank's retail net run-off will need to end in the second half of FY21. Specialist home loan growth and commercial loan growth will need to return to pre-covid levels. The broker also thinks it will be challenging to achieve margin guidance.
Earnings growth forecasts for FY21-22 have been upgraded.
Considering the stock fairly valued, Equal-weight rating has been retained. Target rises to
Sector: Banks.
Target price is
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