Australia’s Banking And Finance Sector Stocks- A Sneak Peak On ED1, FID, BOQ, CYB

  • Aug 28, 2019 AEST
  • Team Kalkine
Australia’s Banking And Finance Sector Stocks- A Sneak Peak On ED1, FID, BOQ, CYB

We have always emphasized on the importance of the Australian banking and finance industry and the role it plays in the country’s economy. An interesting fact about the banking and finance sector is that it has maintained its significant stance in the Australian economy since a century. In this article, we have covered two stocks each from the banking and finance industry, respectively, to acquaint readers about their latest updates and stock performance.

Before diving into it, we encourage you to read the significance of the banking and finance industry HERE.

Evans Dixon’s FY19 Results

Provider of high quality market leading financial advice for private clients, institutional clients and corporates, Evans Dixon Limited (ASX: ED1) released its FY19 results on 26 August 2019. The company reported an Underlying EBITDA of $37.1 million, down 26% on pcp but within the guidance range of $35-$38 million. The major reasons for the slump were lower capital markets revenue and lower transaction and performance fees, along with costs of internalising investment management. ED1 reported a NPAT of $16.8 million, down 13% and an EPS of 9.8 cents. The FUA was $20.1 billion, up 10% and FUM was posted to be $6.8 billion, up 21%.

As part of the results, the company declared a final dividend of 3 cps, taking the full year dividend to 8 cps and representing an 85% pay-out ratio for FY19. The declared dividend would be paid to shareholders on 11 October 2019, and the company’s AGM would take place on 11 November 2019.

ED1’s Financial Highlights (Source: ED1’s Report)

Outlook: The first months of FY20 have been centred towards conducting an operational review to deliver cost efficiencies and further improve cross business integration. The company stated that the year had begun well, and it had a pipeline of encouraging corporate advisory transactions. Subject to market conditions, the completion rate of transactions and regulatory conditions, ED1’s FY20 performance is likely to improve relative to the second half of 2019.

Fiducian Group’s FY19 Results

A specialist financial services organisation, Fiducian Group Limited (ASX: FID) released its FY19 results on 15 August 2019. The highlight of the report was the FUM Advice and Administration, growing by over 107% over the past 5 years to $7.40 billion as at June 2019. The statutory NPAT was reported at $10.35 million, up 13% on pcp and underlying EPS of 38.3 cents was 14% up on pcp. FID achieved net operating cash flows of $10.9 million and cash at year end was $11.8 million. During the year, Funds under Advice grew from $2.41 billion in June 2018 to $2.74 billion in June 2019, catalysed by acquisitions of financial planning businesses, net inflows and rising financial markets.

Executive Chairman, Mr Indy Singh bagged the Lifetime Achievement Award at Money Management’s 2019 Fund Manager of the Year Awards ceremony. As part of the results, the FID Board declared a fully franked final dividend of 11.30 cps, taking the final dividend for FY19 to 22.30 cents, representing 68% of the statutory NPAT for the year. The final dividend would be paid on 11 September 2019 to the shareholders.

FID’s FY19 Highlights (Source: FID Report)

Outlook: FID expects profit growth to continue steadily in FY20, as revenue from recent business acquisitions should increasingly benefit the bottom line. FID would prioritise on Expenditure controls and profits.

Bank of Queensland’s Updates

A significant player in the Australian banking, financial and related services, Bank of Queensland Limited (ASX: BOQ) made an ordinary dividend distribution announcement on 21 August 2019, relating to one quarter. An amount of A$0.82, fully-franked, with a payment date of 15 November was announced at a distribution base rate of 0.94% p.a.

In another update from BOQ from 8 August 2019, the Board intimated the shareholders and media about the retirement of its Non?Executive Director and Chair of the Human Resources & Remuneration Committee, Mr David Willis, which would be effective after BOQ’s AGM on 10 December 2019. He would continue to remain a Non?Executive Director of BOQ’s insurance subsidiaries, St Andrew’s Life Insurance Pty Ltd, St Andrew’s Australia Services Pty Ltd and St Andrew’s Insurance Pty Ltd.

Maintaining its governance responsibilities, BOQ submitted an APRA Standard APS 330: Public Disclosure for the quarter ending 31 May 2019. According to the report, The Board had set the common equity tier 1 capital target range between 8.25% and 9.5%, while the total capital target range was reported to lie between 11.75% and 13.5%. As at 31 May 2019, BOQ’s common equity tier 1 capital ratio was at 8.9% and the total capital ratio was at 12.3%.

BOQ’s Capital Structure as at 31 May 2019 (Source: BOQ’s Report)

CYBG PLC’s Q319 Update

On 30 July 2019, the amalgamated banking firm of Clydesdale Bank, Virgin Money and Yorkshire Bank, CYBG PLC (ASX: CYB) released its Third Quarter 2019 Trading Update, highlighting that it had made good progress with the Virgin Money integration programme. Q3 Mortgage book reduction of 0.2% to £60.4 billion and the Q3 Business lending growth was reported at 0.5% to £7.7 billion. The Q3 Personal lending growth was reported at 5.7% to £4.8 billion, whereas the Customer deposit growth in the period was 1.8% to £62.8 billion. NIM of 168bps was 3bps lower compared to 1H19, and the yearly NIM is likely to be at the lower-end of the guidance range of 165-170bps.

CYB’s Q319 Highlights (Source: CYB’s Report)

The Pillar 2A CET1 requirement reduced from 3.6% to 3% in the quarter as in July 2019, CYB received updated firm-specific capital requirement from the PRA.

CYB would determine its final costs post the 29 August complaint deadline and update the market with its yearly results in November 2019.

Let us now browse through the stock and return profile of these banking and finance related stocks, as on 28 August 2019:

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