What to do with the Australian Banks?

Travelling around Queensland this week and meeting with clients one of the questions most frequently asked was, “What should I do with my bank shares?” Furthermore today has been one of the worst trading days for the banks since the GFC and with 30 minutes to go before the close the major banks have fallen roughly 3.5% today. Assessing future prospects for the major banks is currently one of the biggest issues facing investors; from the largest institutional equity fund manager at Colonial First State to the smallest retail investor who bought shares in CBA when it was floated in 1991 at $5.40. Over the last 3 months the banking sector’s share prices have declined -14%, significantly worse than the -6.5% total return posted by the ASX200. In this piece we are going to set aside today’s emotional selling and are going to look at the causes of this correction along with some thoughts for the future

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