ANZ Banking Group will post its slowest annual earnings growth since the global financial crisis Thursday, underscoring the challenges Australia's major banks face from tighter capital rules even as another year of record profits beckons.
Lending growth at Australia's major banks is easing as the broader economy cools following the end of a mining investment boom. Bad debt charges are set to rise and regulators are demanding more cash be set aside against loan books.
But with bank shares about 20 percent off their 2015 peaks, investors are seeing value, attracted by dividend yields of over 5 percent compared with an official cash rate of 2.0 percent.
"It is better to invest in banks than having that money in cash," said Nicholas Forsyth, director at stock trading firm Market Matters which owns ANZ shares.
"They've all raised capital, and if you look at the dividend yields there is a disparity to the cash rate. Banks still have the capacity to return to shareholders."