During the course of the financial services royal commission, Australia’s major banks saw billions wiped from their value as investors dropped out of the besieged financial sector.
However, those losses appear set for a reversal following what some analysts say has been a winning final report for the banks.
And indeed on the first day of trading after the release of the report the financial institutions have seen a dramatic turnaround in fortune.
All four of the big four banks were in the green after the closing bell on Tuesday, including NAB whose senior leaders were specifically castigated by the Royal Commissioner.
AMP – which has seen a near 100 per cent decline in profit and threats of a shareholder revolt relating partly to royal commission – has also seen a sharp bounce of 9.95 per cent after the report declined to recommend any major structural changes that would disadvantage its business model.
The outcome was prophesied by equities analyst Julia Lee of Bell Direct just hours after the report’s release on Monday.
Speaking to Your Money Live, Lee said there are three key areas in the final report that could have a direct impact on portfolios: financial advice, mortgage operators and funeral service operators.
Notably, the report makes no recommendation of changes to vertical integration which allows lenders to promote or sell other financial products that they manufacture, such as superannuation or insurance.
“I wouldn’t be surprised to see a relief rally on the back of this,” Lee said.
“And for me, the big one was vertical integration, the separation of advice and product, which doesn’t look like it’s going ahead… it’s early days yet but it’s positive for the banks.”
While investors of the major banks will be relieved, those with shares in mortgage operators such as Mortgage Choice, and listed funeral operators can expect some pain in the coming days, according to Lee.
Watch the video above for for more from Julia Lee.