Australia Banks: Refining Model Assumptions

Goldman Sachs has updated its Australian banking models, raising the risk-free rate to 4.0% and lowering price targets across the sector to reflect current market pricing.

Key Takeaways

• 1.The risk-free rate assumption was increased from 3.5% to 4.0%, reflecting higher real rates and an outlook 1.5% above the RBA's inflation target midpoint.
• 2.Price targets for major and mid-tier Australian banks have been revised downward due to higher discount rates and updated sector multiples.
• 3.Lending assumptions have been slightly adjusted to reflect lower non-housing lending growth specifically in the New Zealand market.

Table of Contents

• ANZ Group Investment Thesis
• ANZ Group Price Target, Risks, and Methodology
• CBA Investment Thesis
• CBA Price Target Risks and Methodology
• Westpac Investment Thesis
• Westpac Price Target, Risks, and Methodology
• Bendigo and Adelaide Bank Investment Thesis
• Price Target Risks and Methodology
• BOQ Investment Thesis
• JDO Investment Thesis
• Disclosure Appendix