Ann: Final Results, page-5

"If we assume they can get to the mid point of their cost:income ratio, this would imply with minimal top line growth (3%) an EPS of 30p/share. Do you think a forward PE of 10 is about right, cheap or expensive?"

Global banks tend to face fiercer competition than Australian banks (which are really just one big bank with four separate brands, for all intents and purposes... no matter what the banking executives here claim). Also, the structure of the Australian equity market and the significant quantum of retirement capital - due to compulsory superannuation - means that there is structurally permanent buying of Australian banks (indeed, of all Australian blue chip stocks).

For those sorts of reasons, global banks don't trade at the same valuation multiples of the big four banks in Australia.

So, I think 10x for a regional bank in the UK is fair and reasonable.
Maybe a leeetle beeet cheeep.

ANZ, NAB and WBC trade on 13x P/E currently... so maybe CYB therefore warrants, say, 11x. (I happen to think that 13x is too high for ANZ, NAB and WBC, anyway, at this stage of the retail credit cycle.)


"The 1p/share dividend certainly was 'modest'."

Yes, mere token; but it is really academic because the CYB story was never about capital returns to shareholders; it was always a self-help, cost-out, modernisation, digital efficiency investment thesis.

Which I think has transpired the way I thought it would (better, even, in some respects).

Don't get me wrong: I'm not saying that I'm going to sell my shares tomorrow... there's nothing broken here.

It's just that - like many other half-decent businesses - it is no longer ridiculously and unambiguously undervalued.