1 00:00:03,960 --> 00:00:06,300 Sean Aylmer: Welcome to the Fear and Greed Business Interview. I'm Sean 2 00:00:06,570 --> 00:00:08,730 Sean Aylmer: Aylmer. A couple of weeks ago, I talked about the 3 00:00:08,730 --> 00:00:12,629 Sean Aylmer: health of Australia's banks. The Australian Prudential Regulation Authority, the 4 00:00:12,630 --> 00:00:15,870 Sean Aylmer: regulator, did its annual stress test on the banking system, 5 00:00:15,870 --> 00:00:18,600 Sean Aylmer: looking at what would happen if unemployment went to 10%, 6 00:00:18,600 --> 00:00:21,750 Sean Aylmer: inflation stayed high, and house prices fell by one- third. 7 00:00:22,200 --> 00:00:26,310 Sean Aylmer: The full results aren't out yet, but under those conditions, 8 00:00:26,369 --> 00:00:29,129 Sean Aylmer: all banks seem to look like they'll be maintaining sufficient 9 00:00:29,130 --> 00:00:31,739 Sean Aylmer: liquidity, or at least the Big Four will. In short, 10 00:00:31,799 --> 00:00:34,979 Sean Aylmer: from the regulator's perspective, the Big Four banks are in 11 00:00:34,979 --> 00:00:38,520 Sean Aylmer: pretty good shape. But what about for investors? Morningstar has 12 00:00:38,520 --> 00:00:42,510 Sean Aylmer: released its Australian Bank Industry Pulse third- quarter report, looking 13 00:00:42,510 --> 00:00:44,429 Sean Aylmer: at all the big banks and where the risks and 14 00:00:44,429 --> 00:00:48,150 Sean Aylmer: opportunities might be. Remember, this is general information only and 15 00:00:48,150 --> 00:00:51,299 Sean Aylmer: you should always speak to a professional advisor before making 16 00:00:51,299 --> 00:00:55,980 Sean Aylmer: any investment decisions. Nathan Zaia is Morningstar's Bank Analyst. Nathan, 17 00:00:55,980 --> 00:00:57,060 Sean Aylmer: welcome to Fear and Greed. 18 00:00:57,750 --> 00:00:58,920 Nathan Zaia: Morning, Sean. Thanks for having me on. 19 00:00:59,760 --> 00:01:01,620 Sean Aylmer: Banks are such a big part of the market and 20 00:01:01,620 --> 00:01:04,559 Sean Aylmer: financials, I think, what, are 20%, 25% of the ASX? So, 21 00:01:04,770 --> 00:01:07,500 Sean Aylmer: if you're investing in the ASX, it's something you have 22 00:01:07,500 --> 00:01:10,619 Sean Aylmer: to consider. What should you be looking at? What should 23 00:01:10,619 --> 00:01:13,860 Sean Aylmer: you be assessing when you're thinking about investing in banks? 24 00:01:14,250 --> 00:01:17,369 Nathan Zaia: I think the first thing, like when you're investing in 25 00:01:17,370 --> 00:01:21,328 Nathan Zaia: everything, is the valuation. So, what is priced into that 26 00:01:21,330 --> 00:01:24,630 Nathan Zaia: business? Because when we look at banks as a whole 27 00:01:24,630 --> 00:01:28,049 Nathan Zaia: in our coverage list, that we see opportunities in some, 28 00:01:28,049 --> 00:01:30,509 Nathan Zaia: and there's some that look fairly valued and overvalued. So, 29 00:01:30,510 --> 00:01:34,020 Nathan Zaia: I think that is definitely one thing. I think the 30 00:01:34,020 --> 00:01:38,399 Nathan Zaia: level of profitability, because like you said, we could enter 31 00:01:38,400 --> 00:01:43,319 Nathan Zaia: a period where economic conditions deteriorate pretty quickly and then 32 00:01:43,319 --> 00:01:46,350 Nathan Zaia: you have bad debts rising fast. So, the more profitable 33 00:01:46,350 --> 00:01:48,179 Nathan Zaia: you are, the more of a buffer you have to 34 00:01:48,240 --> 00:01:53,010 Nathan Zaia: absorb those losses. The capital position of those banks. So, 35 00:01:53,010 --> 00:01:58,650 Nathan Zaia: again, how much of a deterioration in credit quality can 36 00:01:58,650 --> 00:02:02,009 Nathan Zaia: they absorb without needing to go to shareholders and ask for 37 00:02:02,009 --> 00:02:05,490 Nathan Zaia: more money? Those are some of the key things. I 38 00:02:05,490 --> 00:02:09,630 Nathan Zaia: think profitability, so the level of return on equity, is 39 00:02:09,630 --> 00:02:13,200 Nathan Zaia: very important, because it means they're able to generate organic 40 00:02:13,230 --> 00:02:16,529 Nathan Zaia: capital that helps continue to fund loan growth and pay 41 00:02:16,530 --> 00:02:17,970 Nathan Zaia: dividends at the same time. 42 00:02:18,840 --> 00:02:20,429 Sean Aylmer: I want to get into the specific banks in a 43 00:02:20,429 --> 00:02:23,788 Sean Aylmer: moment, but the sector as a whole, it just seems 44 00:02:23,788 --> 00:02:25,680 Sean Aylmer: at times, I mean a couple of years ago ANZ 45 00:02:25,889 --> 00:02:28,020 Sean Aylmer: was flavor of the month, Westpac seems to be more 46 00:02:28,020 --> 00:02:32,700 Sean Aylmer: the trend now. Over the long term, do specific banks 47 00:02:32,700 --> 00:02:36,089 Sean Aylmer: tend to outperform the others, or is it a sector 48 00:02:36,090 --> 00:02:39,510 Sean Aylmer: that eventually moves in step with each other? 49 00:02:39,510 --> 00:02:45,750 Nathan Zaia: I mean, I guess time will tell. Historically there have been, 50 00:02:45,750 --> 00:02:49,200 Nathan Zaia: like you said, times where one is doing very well 51 00:02:49,200 --> 00:02:51,479 Nathan Zaia: and then one might have the upper hand, whether it 52 00:02:51,480 --> 00:02:55,229 Nathan Zaia: be make a decision around investment in technology, or in 53 00:02:56,040 --> 00:02:59,459 Nathan Zaia: Westpac's case, you have a couple of own goals with 54 00:02:59,459 --> 00:03:04,560 Nathan Zaia: the AUSTRAC investigation and even ASIC over responsible lending, picked 55 00:03:04,560 --> 00:03:08,309 Nathan Zaia: on Westpac. So, there can be those specific things that 56 00:03:08,309 --> 00:03:13,739 Nathan Zaia: hurt you, but in general there's not a material difference in 57 00:03:13,740 --> 00:03:17,220 Nathan Zaia: terms of what they're offering. There's differences in terms of 58 00:03:18,000 --> 00:03:21,839 Nathan Zaia: where they're at in inefficiencies in their own back office, 59 00:03:21,840 --> 00:03:24,810 Nathan Zaia: how efficiently they're processing loans and that sort of thing, 60 00:03:24,810 --> 00:03:30,240 Nathan Zaia: and I think integration across systems and brands, where you're 61 00:03:30,240 --> 00:03:32,340 Nathan Zaia: at with that can be playing a role. But yeah, 62 00:03:32,340 --> 00:03:35,549 Nathan Zaia: if you look, say 10 years ago, I think just 63 00:03:35,549 --> 00:03:38,220 Nathan Zaia: talking share prices, so not a total return, you have 64 00:03:38,250 --> 00:03:44,550 Nathan Zaia: Westpac's down over 30%, ANZ and NAB, call it 15 to 20%, and CBA's 65 00:03:44,550 --> 00:03:51,030 Nathan Zaia: up close to 40%, call it 35. So, a very big difference in 66 00:03:51,030 --> 00:03:55,230 Nathan Zaia: performance. But yeah, in the next 10 years, will that 67 00:03:55,260 --> 00:03:58,920 Nathan Zaia: look exactly the same or will some of the issues 68 00:03:58,920 --> 00:04:02,040 Nathan Zaia: that a couple of those names have had that have 69 00:04:02,040 --> 00:04:05,670 Nathan Zaia: let the giant in the room do even better, will 70 00:04:05,670 --> 00:04:09,660 Nathan Zaia: those swing back? We think it's probably likely that the 71 00:04:09,660 --> 00:04:12,030 Nathan Zaia: next 10 years doesn't look exactly like the last 10 years. 72 00:04:12,030 --> 00:04:15,570 Sean Aylmer: Okay. So, maybe let's talk about Westpac then. We'll stick with 73 00:04:15,570 --> 00:04:17,940 Sean Aylmer: them before we get to the giant. What's your view 74 00:04:17,940 --> 00:04:19,409 Sean Aylmer: on Westpac? 75 00:04:20,010 --> 00:04:23,220 Nathan Zaia: Yeah, so I kind of touched on it, but we think 76 00:04:23,670 --> 00:04:26,219 Nathan Zaia: what's happened in the last few years which has led 77 00:04:26,219 --> 00:04:29,879 Nathan Zaia: to it. So, the share price under- performance, that's been 78 00:04:29,879 --> 00:04:34,170 Nathan Zaia: driven by an earnings under- performance as well. They've been losing 79 00:04:34,470 --> 00:04:38,099 Nathan Zaia: share in home loans, so revenue going backwards, and at 80 00:04:38,099 --> 00:04:41,070 Nathan Zaia: the same time, their cost base has been climbing higher 81 00:04:41,070 --> 00:04:44,428 Nathan Zaia: than everyone else's. So, it's the opposite of what you'd 82 00:04:44,428 --> 00:04:46,919 Nathan Zaia: like to see happening. But there was a few things 83 00:04:46,920 --> 00:04:50,039 Nathan Zaia: going on behind the scenes. They were taken to court 84 00:04:50,040 --> 00:04:54,630 Nathan Zaia: over responsible lending practices, they had the AUSTRAC issues. So, 85 00:04:54,630 --> 00:04:56,999 Nathan Zaia: a lot of things that just make the bank harder 86 00:04:57,000 --> 00:04:59,070 Nathan Zaia: to do business with, and I think when you have 87 00:04:59,070 --> 00:05:04,320 Nathan Zaia: risk and compliance takeover, it's not ideal. But yeah, so 88 00:05:04,320 --> 00:05:06,900 Nathan Zaia: you've had that impact on the top line, and then 89 00:05:06,960 --> 00:05:09,779 Nathan Zaia: obviously a lot of costs going into the business to 90 00:05:10,230 --> 00:05:13,738 Nathan Zaia: remediate issues. There could have been some underinvestment in the 91 00:05:13,740 --> 00:05:17,490 Nathan Zaia: past as well. So, that uplift in risk and compliance 92 00:05:17,490 --> 00:05:19,979 Nathan Zaia: spend, and even the spend on technology, it's been quite 93 00:05:19,980 --> 00:05:23,669 Nathan Zaia: material. But we think once you get through that catch 94 00:05:23,670 --> 00:05:26,850 Nathan Zaia: up of spend to fix some of these things, we 95 00:05:26,850 --> 00:05:30,270 Nathan Zaia: don't think the cost base should be permanently higher than 96 00:05:30,270 --> 00:05:32,520 Nathan Zaia: its peers. If you look at their cost income ratio 97 00:05:32,520 --> 00:05:35,400 Nathan Zaia: now, it's much higher than their major bank peers, so 98 00:05:35,400 --> 00:05:38,219 Nathan Zaia: we think it can come down a little bit over 99 00:05:38,219 --> 00:05:41,970 Nathan Zaia: time. So, that's where we think there's opportunity for Westpac's 100 00:05:42,000 --> 00:05:45,719 Nathan Zaia: earnings to outperform its peers. I don't think the market is 101 00:05:45,720 --> 00:05:48,420 Nathan Zaia: fully on board with that. And the other part of 102 00:05:48,420 --> 00:05:52,110 Nathan Zaia: the equation is what sort of multiple people are willing 103 00:05:52,110 --> 00:05:54,510 Nathan Zaia: to pay for this business. So, at the moment it's 104 00:05:54,599 --> 00:05:58,020 Nathan Zaia: call it P of 10, 10 and a half, I think 105 00:05:58,440 --> 00:06:02,010 Nathan Zaia: the market's pretty much saying what happened in the last 106 00:06:02,010 --> 00:06:04,289 Nathan Zaia: few years is probably likely to repeat again. We don't 107 00:06:04,290 --> 00:06:07,860 Nathan Zaia: believe you will be able to effectively take cost out 108 00:06:07,920 --> 00:06:10,590 Nathan Zaia: and grow in line with the market. So, I think 109 00:06:10,770 --> 00:06:14,428 Nathan Zaia: if we're right and the earnings do improve, then you 110 00:06:14,428 --> 00:06:17,760 Nathan Zaia: get the earnings improvement and you get the market re- 111 00:06:17,760 --> 00:06:21,180 Nathan Zaia: rating Westpac higher. So, that's why we have a bit 112 00:06:21,180 --> 00:06:24,000 Nathan Zaia: of a contrarian view on Westpac at the moment. We're 113 00:06:24,930 --> 00:06:25,920 Nathan Zaia: positive on the name. 114 00:06:26,250 --> 00:06:28,049 Sean Aylmer: Stay with me, Nathan. We'll be back in a minute. 115 00:06:34,289 --> 00:06:37,980 Sean Aylmer: My guest today is Nathan Zaia, Senior Equity Analyst at 116 00:06:38,070 --> 00:06:41,880 Sean Aylmer: Morningstar. Okay, what about Commonwealth Bank? That is the giant 117 00:06:41,880 --> 00:06:44,160 Sean Aylmer: in the room and it has been an incredible force 118 00:06:44,160 --> 00:06:45,299 Sean Aylmer: in the last 10 years or so. 119 00:06:46,080 --> 00:06:49,020 Nathan Zaia: Yeah, I mean, there is a lot to like about 120 00:06:49,020 --> 00:06:52,619 Nathan Zaia: Commonwealth Bank and we do like the bank, it's market 121 00:06:52,619 --> 00:06:55,620 Nathan Zaia: share, the dominant position it has, it gives it scale 122 00:06:55,620 --> 00:06:59,370 Nathan Zaia: advantages, it has a funding cost advantage, so raises more 123 00:06:59,370 --> 00:07:03,089 Nathan Zaia: in transaction account balances than, well, it has and continues 124 00:07:03,089 --> 00:07:06,120 Nathan Zaia: to raise more than any of the peers. It gets 125 00:07:06,120 --> 00:07:09,210 Nathan Zaia: a lot of flow of lending through its direct channels, 126 00:07:09,210 --> 00:07:11,699 Nathan Zaia: so through its branches. So, there is a real strong 127 00:07:11,699 --> 00:07:16,590 Nathan Zaia: franchise advantage that they have generating higher ROE. You can 128 00:07:16,920 --> 00:07:19,650 Nathan Zaia: go on for a few pages of why Commonwealth Bank's 129 00:07:19,650 --> 00:07:22,800 Nathan Zaia: the best, but then it comes down to, again, what 130 00:07:22,800 --> 00:07:26,250 Nathan Zaia: is priced in. So, even in the last little while 131 00:07:26,250 --> 00:07:29,760 Nathan Zaia: we've seen Commonwealth Bank's losing some share because it's not 132 00:07:29,760 --> 00:07:33,870 Nathan Zaia: willing to continue down this path of pricing loans at 133 00:07:33,870 --> 00:07:37,860 Nathan Zaia: levels where they don't think they're getting an adequate return. 134 00:07:37,860 --> 00:07:40,860 Nathan Zaia: So, they're not going to have it all their own 135 00:07:40,860 --> 00:07:45,329 Nathan Zaia: way indefinitely. So yeah, we look at the bank's making 136 00:07:45,330 --> 00:07:49,860 Nathan Zaia: at about a 14% ROE now, we think that can grow a 137 00:07:49,860 --> 00:07:52,110 Nathan Zaia: little bit higher, but we don't think it gets back 138 00:07:52,110 --> 00:07:56,099 Nathan Zaia: to the 18% of the past when CBA used to trade 139 00:07:56,099 --> 00:07:59,699 Nathan Zaia: on multiples where it's trading on now. 10 years ago, 140 00:07:59,700 --> 00:08:04,260 Nathan Zaia: we would pay two times for this bank on an ROE of 18. 141 00:08:04,289 --> 00:08:07,080 Nathan Zaia: Now we're paying a higher multiple when its ROE's even 142 00:08:07,080 --> 00:08:11,250 Nathan Zaia: lower. So, it just doesn't feel like there's much room 143 00:08:12,390 --> 00:08:14,550 Nathan Zaia: there. So, we do value it at a premium to 144 00:08:14,550 --> 00:08:16,920 Nathan Zaia: its peer group, but the question is how much of 145 00:08:16,920 --> 00:08:20,549 Nathan Zaia: a premium should you be willing to pay? And we 146 00:08:20,549 --> 00:08:23,429 Nathan Zaia: think it looks a bit overvalued. Even the dividend yield, 147 00:08:24,510 --> 00:08:27,090 Nathan Zaia: with a four in front of it, you can get a 148 00:08:27,090 --> 00:08:30,150 Nathan Zaia: term deposit with a five now. So, we don't think 149 00:08:30,150 --> 00:08:34,530 Nathan Zaia: that the equity risks within this business are fully being 150 00:08:34,530 --> 00:08:35,699 Nathan Zaia: appreciated at the moment. 151 00:08:36,750 --> 00:08:38,939 Sean Aylmer: And just quickly, we better go through ANZ and NAB 152 00:08:38,940 --> 00:08:40,949 Sean Aylmer: before we get onto some of the smaller players. What 153 00:08:40,949 --> 00:08:41,700 Sean Aylmer: do you think of those two? 154 00:08:42,450 --> 00:08:48,090 Nathan Zaia: Yeah, I think ANZ's a similar story to Westpac in terms of it's had its 155 00:08:48,720 --> 00:08:52,800 Nathan Zaia: issues, which is why it was losing share, but using 156 00:08:52,800 --> 00:08:58,019 Nathan Zaia: price mostly. But it's showing that it can handle an 157 00:08:58,020 --> 00:09:03,120 Nathan Zaia: increase in volumes without losing share. Institutional book is doing 158 00:09:03,120 --> 00:09:07,110 Nathan Zaia: really well. Yeah, NAB we see fairly valued. I think it, like 159 00:09:07,770 --> 00:09:11,850 Nathan Zaia: CBA, has executed reasonably well in the last few years 160 00:09:11,880 --> 00:09:15,420 Nathan Zaia: and took the opportunity to grow share while some of 161 00:09:15,420 --> 00:09:18,809 Nathan Zaia: those other banks were struggling. So, it's kind of I 162 00:09:18,809 --> 00:09:21,179 Nathan Zaia: put the NAB and CBA in one bucket and ANZ in 163 00:09:21,179 --> 00:09:24,270 Nathan Zaia: Westpac in one bucket in terms of where they've been 164 00:09:24,270 --> 00:09:27,240 Nathan Zaia: in the last few years and then the outlook. But 165 00:09:27,300 --> 00:09:30,660 Nathan Zaia: NAB does have a higher weighting to small and medium 166 00:09:30,660 --> 00:09:33,420 Nathan Zaia: business, which is something that we're a bit wary of 167 00:09:34,320 --> 00:09:38,819 Nathan Zaia: in this current interest rate cycle. There might be more 168 00:09:38,820 --> 00:09:41,910 Nathan Zaia: pain there than the others, but yeah, I still think 169 00:09:41,910 --> 00:09:42,780 Nathan Zaia: it'll be manageable. 170 00:09:43,470 --> 00:09:46,559 Sean Aylmer: Okay, so let's get to the non- majors. Bank of 171 00:09:46,559 --> 00:09:49,049 Sean Aylmer: Queensland, that's been on quite the ride for the last 172 00:09:49,349 --> 00:09:55,260 Sean Aylmer: year or so. Its CEO came and went, its Chair 173 00:09:55,260 --> 00:09:59,490 Sean Aylmer: stepped in, and then more recently its outlook statements haven't 174 00:09:59,490 --> 00:10:01,530 Sean Aylmer: been great. What do you think of Bank of Queensland? 175 00:10:02,429 --> 00:10:06,750 Nathan Zaia: Yeah, I mean, it's in the weaker position than the major 176 00:10:06,750 --> 00:10:09,780 Nathan Zaia: banks that we've been speaking about. It's a higher cost 177 00:10:09,780 --> 00:10:13,260 Nathan Zaia: bank, so its funding is more expensive, whether it be 178 00:10:13,260 --> 00:10:17,040 Nathan Zaia: in the wholesale market or customer deposits. It's had to 179 00:10:17,040 --> 00:10:21,300 Nathan Zaia: rely on term deposits, which are more expensive. So, it's 180 00:10:21,599 --> 00:10:24,569 Nathan Zaia: getting hit on both sides from the funding costs rising, 181 00:10:24,570 --> 00:10:26,848 Nathan Zaia: there's a lot of competition from term deposits at the 182 00:10:26,849 --> 00:10:31,140 Nathan Zaia: moment, very competitive in the mortgage market, so its margins 183 00:10:31,140 --> 00:10:35,940 Nathan Zaia: are getting squeezed, it's losing share. It's cost base, there's 184 00:10:35,940 --> 00:10:39,328 Nathan Zaia: been, I guess some hope that it'll eventually start to 185 00:10:39,330 --> 00:10:44,099 Nathan Zaia: come down as they work on consolidating and integrating systems, 186 00:10:44,099 --> 00:10:48,000 Nathan Zaia: which that's been a bit of an ongoing saga for 187 00:10:48,000 --> 00:10:51,510 Nathan Zaia: a lot of these banks. But the reason we have 188 00:10:51,510 --> 00:10:54,990 Nathan Zaia: a positive recommendation on it now really hinges on the 189 00:10:54,990 --> 00:10:59,819 Nathan Zaia: industry as a whole, repricing more favorably to make a 190 00:10:59,820 --> 00:11:02,429 Nathan Zaia: better margin. We don't think the majors are earning a 191 00:11:02,429 --> 00:11:05,669 Nathan Zaia: high enough return at the moment. So, following on from 192 00:11:05,670 --> 00:11:09,088 Nathan Zaia: that, they'll lift pricing and the regionals will be able 193 00:11:09,090 --> 00:11:12,090 Nathan Zaia: to follow, and then over the next few years it 194 00:11:12,179 --> 00:11:16,559 Nathan Zaia: gets that revenue tailwind and some cost out. We're not 195 00:11:16,620 --> 00:11:20,490 Nathan Zaia: very bullish on the cost savings, but it's a combination 196 00:11:20,490 --> 00:11:23,368 Nathan Zaia: of those that sees an improvement in the bank's position 197 00:11:23,369 --> 00:11:26,850 Nathan Zaia: in a couple years. Still at a material disadvantage to 198 00:11:26,850 --> 00:11:29,910 Nathan Zaia: the majors, but yeah, the thing that looks cheap at 199 00:11:29,910 --> 00:11:33,000 Nathan Zaia: the moment, there is obviously a lot of risk around 200 00:11:33,420 --> 00:11:38,040 Nathan Zaia: that execution on costs and if the industry intensity in 201 00:11:38,040 --> 00:11:41,339 Nathan Zaia: terms of pricing on deposit and mortgages does ease, which 202 00:11:41,340 --> 00:11:41,910 Nathan Zaia: we expect. 203 00:11:42,270 --> 00:11:44,340 Sean Aylmer: Then it could be okay. One final question, because we're 204 00:11:44,340 --> 00:11:46,679 Sean Aylmer: totally out of time, in fact, we're about a minute over time because 205 00:11:46,679 --> 00:11:50,220 Sean Aylmer: I've been involved in this conversation too much, Nathan. Dividends, 206 00:11:50,610 --> 00:11:52,950 Sean Aylmer: many investors out there love their dividends. Do you think 207 00:11:52,950 --> 00:11:55,050 Sean Aylmer: we're going to see dividend growth in coming years? 208 00:11:55,679 --> 00:11:58,919 Nathan Zaia: I think it'll be modest. The earnings outlook in the 209 00:11:58,920 --> 00:12:02,400 Nathan Zaia: next little while doesn't look too great. I think we 210 00:12:02,400 --> 00:12:05,670 Nathan Zaia: will have some NIM pressure, then you've got bad debts 211 00:12:05,850 --> 00:12:09,930 Nathan Zaia: normalizing from a very low base, but yeah, I think 212 00:12:10,290 --> 00:12:13,950 Nathan Zaia: they'll hold or at least grow modestly. But yeah, the 213 00:12:13,950 --> 00:12:17,488 Nathan Zaia: one thing where I take some comfort, even if we 214 00:12:17,490 --> 00:12:20,098 Nathan Zaia: are wrong on the earnings outlook in the short term 215 00:12:20,100 --> 00:12:23,160 Nathan Zaia: in terms of it being a little bit tougher than 216 00:12:23,160 --> 00:12:26,608 Nathan Zaia: we're predicting before recovery, they are sitting on a lot 217 00:12:26,610 --> 00:12:29,940 Nathan Zaia: of surplus capital. So, hopefully they'll be able to tap 218 00:12:29,940 --> 00:12:33,328 Nathan Zaia: into that to support the dividend if earnings do soften. 219 00:12:33,960 --> 00:12:35,401 Sean Aylmer: Nathan, thank you for talking to Fear and Greed. 220 00:12:35,401 --> 00:12:37,260 Nathan Zaia: No, it's a pleasure. Thank you. 221 00:12:37,650 --> 00:12:40,890 Sean Aylmer: That was Nathan Zaia, Senior Equity Analyst at Morningstar. This 222 00:12:40,890 --> 00:12:42,960 Sean Aylmer: is the Fear and Greed Business Interview. Remember, this is 223 00:12:42,960 --> 00:12:45,900 Sean Aylmer: general information only, and you should always seek professional advice 224 00:12:45,900 --> 00:12:49,349 Sean Aylmer: before making any investment decision. Join us every morning for 225 00:12:49,349 --> 00:12:51,660 Sean Aylmer: the full episode of Fear and Greed, Australia's best business 226 00:12:51,660 --> 00:12:54,149 Sean Aylmer: podcast. I'm Sean Aylmer. Enjoy your day.