FirstRand released their interim results to December 2009 yesterday. Phew, all the banking stocks have rallied hard, all trading on multiples that suggest that earnings are going to pick up fairly aggressively from here. The factsheet that I look at suggests that the six banks covered by the analyst community should grow earnings around 18 to 25 percent this year and then 20 to 30 percent next year. So, two years out that puts all the banks at current levels at comfortably below 10 times earnings. ABSA and Nedbank look particularly cheap.
Near the lows in June last year, the market capitalisation of FirstRand is nearly the same as that in 2005 at the same year end time, June. Wow. Just shows you that those not feeling the faith last year certainly were very mistaken. Buy them now? I don't know, we are still tending to avoid banks with complex black box trading models (that admittedly have been shut down in RMB and FirstRand's case) that are sometimes followed. Just saying, for us ABIL might have made a ill timed acquisition of Ellerines, but ABSA, Nedbank, RMB were all forced to take over single stock futures positions of a dubious quality, by default. That is all. Not because they wanted to own Pinnacle Point, Simmers, Vox or African Dawn.