BANK LEVY ON BIG FOUR COULD DRIVE CUSTOMERS TO REGIONAL BANKS
Written on the 10 May 2017 by Ben Hall
THE BANK of Queensland (ASX: BOQ) is expected to be a major beneficiary of the Federal Government's bank levy which was introduced in Tuesday's Budget.
The Government levy will raise $1.5 billion a year over the next four years, or around five per cent of the profits from the so-called 'Big Four' which includes Commonwealth Bank (ASX:CBA), Westpac (ASX: WBC), NAB (ASX: NAB) and ANZ (ASX: ANZ). Macquarie Group (ASX: MQG) will also be the subject of the new tax.
In a research note, Citi analysts said BOQ should benefit from the levy and they confirmed their sell recommendations on CBA, WBC and NAB and maintained their neutral call on ANZ.
Senior research analyst with Brisbane-based Burrell Stockbroking, Bruce McLeary, says there is a potential for customers to switch to BOQ and other regional banks, although it's not known to what extent.
"BOQ could benefit from this, but it all depends now on what the big four banks do from here and we don't know their response just yet," McLeary says.
"If they pass on their costs to their customers, then the smaller banks and regionals like BOQ, Suncorp and Bendigo could potentially pick up a bit of market share.
"The difference is the Bank of Queensland won't be sitting around their board room this morning wondering what they're going to do about the levy, like all the big players will be doing.
"They'll be sitting around wondering how they may benefit from it, based on what actions the big banks take."
More than $14 billion in value was wiped from those stocks when news of the levy was leaked to the media before the Budget announcement on Tuesday.
"There was some heavy selling on the big banks which was to be expected and last night we were wondering how their shares would go today and it looks like they're all mostly down again as well, but not by as much as yesterday," McLeary says.
"Certainly the market thinks BOQ will benefit as they're up around two per cent, Bendigo are doing even better than that but Suncorp has only had a modest rise in its share price."
At around 11am AEST, BOQ shares were up by two and a half per cent to $11.86, Bendigo and Adelaide Bank (ASX: BEN) was up three percent to $12.14 and Suncorp (ASX: SUN) rose one and a half per cent to $14.40.
Business News Australia
Author: Ben Hall