Key Points: 

  • ANZ (ANZ) and Westpac (WBC) are trading at a more-than 20% discount to Morningstar's fair value estimate.
  • Commonwealth Bank (CBA) remains an expensive outlier given industry leading return on equity, cost/income ratio, net interest margins, and market share.
  • Major banks are expected to win housing loan market share as small lenders struggle with higher funding costs

See more: Investing outside the big four banks


Nathan Zaia
: We still like Westpac and ANZ purely because we think they're cheap, both are trading at about a 20% discount to our fair value.

And look, they're still in the sin bin, they've had operational issues that have seen them lose market share. But in an environment where credit growth slows and the banks have been spending on digital and improving their own processes, we think they can keep up with the market from here and if they can demonstrate that I think their shares should rerate higher.