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Quarterly blue chip ASX update – banks, materials in focus

ASX

To say the last quarter of 2021 was eventful would be an understatement. Quality continues to pay off for patient investors, as does traditional ‘value’ seeking behaviour. In this article, we provide a short update on some of the ASX’s most popular stocks.

ANZ – Fourth largest bank, institutional banking focus1.4%30.8%ANZ underperformed the market despite delivering a 65 per cent increase in full year profit to $6.4 billion and a doubling of the dividend back to 72 cents per share. Whilst still below the peak in 2020 it marks an incredible turnaround boosted by $500m in loan writebacks.ANZ is benefitting from the threat of higher rates allowing them to increase their own mortgage rates. It wasn’t all good news, with the company underperforming the sector due to an inability to assess and write loans as quickly as the other majors in a competitive environment.
BHP – Diversified miner, iron ore, copper, oil10.3%12.1%BHP was once again among the leaders during the quarter, as a recovery in demand for iron ore from Chinese steel mills saw the price move beyond USD$100 again. Quarterly production was below expectations, falling 4 per cent, due to growing staffing issues and planned maintenance shutdowns. Another busy quarter saw shareholders approve the end of the dual listing structure with shares ser to finish trading in the UK. BHP lost out on acquiring Canadian nickel miner Noront Resources, divested their metallurgical coal assets in Queensland and approved the oil merger with Woodside Petroleum.
BLD – Cement and building supplier-0.7%23.2%The breakup of Boral continued to gather pace during the quarter, with the share pricing taking a breather following the end of Seven Group’s informal bid for the company. The group suffered operationally due to the ‘delta’ lockdowns, with the construction shutdown only hitting earnings by $33m.The plans to deliver around $3 billion in capital back to investors, which was a key reason behind Seven taking a controlling stake, took another step with the fly ash business sold for $1.1 billion to a local competitor. The sale was made into a strong construction environment and joins the roofing division.
CBA – Largest bank, residential mortgage focus-3.2%29.9%CBA solidified its position as the dominant Australian bank delivering a 20 per cent increase in profit to $2.2 billion despite a slight weakening of their net interest margin and an unexpected jump in costs. The key driver was CBA’s ability to deliver above system loan growth and do so efficiently. The bank will benefit from higher interest rates as evidenced by their recent decision to increase fixed rate mortgages. In a view to the future, CBA announced they would introduce cryptocurrency payments on their traditional banking app whilst their partnership with BNPL Klarna continues to expand.
MQG – Investment bank and global asset manager14.7%54.2%Macquarie Bank continues to benefit from a boom in corporate activity including takeovers and capital raisings delivering an 107 per cent increase in profit in the first half. The result was just over $2 billion with management taking the opportunity to raise $1.5 billion to deploy in opportunities.After a year of limited realisations, performance fees are set to flow in 2022 which will be reinvested into an abundance of emerging green energy and more sustainable economic investment opportunities. Assets jumped 31 per cent whilst the company doubled their dividend to $2.72 per share.
NAB – Third largest, business and agriculture7.1%36.3%NAB managed to avoid the issues faced by both Westpac and ANZ, becoming a clear second in home lending in the quarter behind CBA, with loans growing above system growth rates. The result was a 77 per cent increase in cash profit to $6.56 billion for the 12 months and a doubling of the dividend to 67 cents.This strength came despite another fall in the net interest margin, triggered by cuts to the RBA’s lending program, but likely offset by out of cycle rate increases by the bank and more success on their cost cutting program. NAB announced they would be exiting lending to oil and gas projects from 2026.
QUB – Port owner, logistics provider-2.5%10.9%Qube underperformed despite reporting strong shipping volumes on the back of a booming agricultural and commodity sector; particularly grain. After acquiring the Newcastle Agri Terminal, the company unexpectedly received notice of an investigation from the ACCC on competition concerns. Qube confirmed the sale of the warehousing and property components of their Moorebank Logistics Park to LOGOS for $1.67 billion with settlement subject to a number of remaining delivery conditions. The company will retain their interest in the terminals and logistics, being their core, profitable business line.
TLS – Mobiles, telecoms, data and infrastructure6.4%49.8%Telstra shares reached another 12 month high in December, following the successful purchase of another $515 million in 5G spectrum that asserts their dominance. The separation and sell off of their various infrastructure assets releases capital for their tech-driven growth and dominant internet business.Management delivered a unique deal, partnering with the Australian Government for the US$1.6 billion purchase of Digicel’s South Pacific telecom business. The Government effectively underwrites the risk with Telstra paying just US$270 million in equity for the ‘commercially attractive’ group.




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