Craigs Investment Partners broker Chris Timms expects ''robust'' first-half earnings, with the banks forecast to report between 1% and 3% in underlying earnings growth and about 2% growth in cash earnings.
The key issues the market would likely focus on are.-
• Margin performance, including competition pressures in institutional lending and negative mix impacts from deposits and lending.
• Cost performance.
• Dividend payout and organic capital generation.
• Trading income.
''We think that bad debts are likely to be less of a focus given the recent stability shown by the leading credit quality indicators,'' he said.
ANZ was expected to report cash earnings today of $A3.1 billion ($NZ3.75 billion) for the six months ended September, up 1.3% on the previous period.
ANZ's margin was expected to have fallen the most out of the peers, driven by its overweight position in institutional lending, lower benefit from mortgage repricing and margin falls in the New Zealand book from mortgage discounting.
''We believe the near-term margin outlook will be a key issue for the market from the upcoming result.''
Non-interest income was expected to have growth at 4.2% half-on-half, driven by growth in the markets business and a continued recovery in trading income towards the historical average, Mr Timms said.
Subdued expense growth was expected, reflecting a continued focus on cost management, particularly in the Australia region which made up 66% of the group cost base.
Westpac, which was expected to report on Friday, was forecast to report cash earnings of $A3.4 billion, down slightly on the previous period.
Westpac's margin was expected to have fallen by 1.5%, reflecting pressure in institutional lending spreads and faster growth in online savers relative to term deposits. Subdued non-interest income growth of 0.4% was expected, largely reflecting the previous period's base which benefited from higher performance fees and a strong markets income result.
A reduction in staff numbers would largely offset wage increases and software amortisation.
The National Australia Bank, owner of the Bank of New Zealand, was expected to report cash earnings of $A2.9 billion. NAB is expected to report on May 9.
Mr Timms said the bank's margin would be flat because of an improvement in NAB United Kingdom and a relative underweight position in institutional lending.
Non-interest growth was expected at 1.6% with stronger growth in wealth management offsetting flat growth in fees income given retail fees remain under pressure.
Craigs expected slightly higher cost growth for the half compared with NAB's recent track record, reflecting a normalisation in performance-based remuneration.
''We believe the sustainability of NAB's recent strong track record on costs will be closely scrutinised.''
Key downside risks for the sector were slow loan growth, increase in the costs of funding and weakness in financial markets affecting funds management income.
Upside risks included further improvement in wholesale funding markets, improvement in market conditions resulting in higher wealth management income and a rebound in business lending, Mr Timms said.
