Weekend Wrap: Loans down, banks down, market down

Hi there!

The second week of reporting season – done and dusted. Overall, nothing too crazy.

In a nutshell: Treasury Wine kept its turnaround ticking along, while Helia's book keeps shrinking but stays well-capitalised enough to keep the special dividends flowing. Origin and AGL both rallied ~5% on solid results. On the other side of the ledger, SGH missed on guidance and tumbled ~10%, and insurers IAG and Suncorp both slipped - Suncorp on catastrophe costs running above allowance, IAG on a thinner underlying margin.

Let’s dive in.

A hard reversal ends a three-week bearish grind and returns sentiment to modestly net-bullish, near long-run averages. The swing was enormous, a 30.1 pp jump, the sharpest one-week move towards optimism since we started the survey last May. What this kind of reaffirms is that multi-week bearishness often mean-reverts in a sharp manner.

Over the next three months, do you expect the Australian stock market to be:

• Bullish

• Neutral

• Bearish

Heavy hitters ANZ and Westpac reported quarterly numbers this week, while CBA delivered its FY26 result.

Westpac was first up (10 Aug) and the stock tanked 5.8% on soft margins and a shocking slide in mortgage application volumes, down 20% post-budget against 2Q26.

CBA (12 Aug) slipped just 0.7% on a fairly orderly FY26 result. It kept flexing its operational excellence, growing at or above market across all five core domestic categories (home lending, business lending, consumer finance, household deposits and business deposits) for the first time on record, and the first time for any major Australian bank in 15 years. Applications, though, still fell 15% since the budget.

ANZ shares rallied 4.5%, perhaps having priced in all the bad news from CBA and Westpac. Its quarterly was orderly too, and individual provision charges came in at just $65m against $130m expected, so bad debts are behaving. Mortgage applications were down 12% since the budget, the best of the three in relative terms.

So the mood is gloomy out there, yet all the stocks really did was slip a little.

After trawling through various earnings calls, here are some interesting snippets.

• CBA on mortgage credit growth: "We're probably in that 4-5% range over the course of the year... at least things seem to have stabilised, and we expect an improvement into later stages of FY27."

• CBA on what drove the drop in applications: "You can generally see applications that are falling... from October 2025, and over time, increasingly, both from affordability constraints, clearly inflation expectations and the first-rate hike in February... then you overlay that with economic uncertainty on a global basis, an oil shock, and yes, taxation changes."

• Westpac on new provisioning: "We did raise a new overlay for discretionary spend... the knock on impact of the consumer that's making adjustments to the way they're living is we've just thought it was prudent to put in something around discretionary spend.”

• Amotiv on 4WD markets: "That fourth quarter exit rate is probably the sharpest move we've seen all year, and that's why we're planning it for FY27 on the basis that the new vehicle sales will stay soft.”

• ASX on the listings pipeline: "Our listings pipeline for FY27 is the strongest it has been in several years and is increasingly weighted towards larger and more diverse transactions"

• HomeCo Daily Needs REIT on the consumer:  "Most retailers said that May, June were a little bit soft... but the bounce back in July has been material and noticeable. That goes across discretionary and non-discretionary sectors"

• HomeCo Daily Needs REIT on the retail outlook: "I am expecting that we are going to be surprised on the upside on retail spending over the course of the next six months"

Life360 suffered a 19.4% selloff on Tuesday, and it was a rather confusing one at first glance. The Q2 result was broadly positive, featuring:

• Revenue up 38% to US$159m vs. US$156.5m ests (2% beat)

• Adjusted EBITDA up 53% to US$31.1m vs. US$25.5m ests (22% beat)

• Adjusted EBITDA margin of 19.6% vs. 16.3% ests (330 bp beat)

• FY26 revenue and adjusted EBITDA guidance reaffirmed, all-important EBITDA margin to land at approximately 20%

The Q2 adjusted EBITDA margin was massively inflated, thanks to a one-time, 300 bp boost from tariff benefits, excluding that (16.6%), margins actually decelerated quarter-on-quarter. It's not a good look.

Still, management reaffirmed FY26 EBITDA margins of 20%. When analysts pressed on what gives them that confidence, management more or less offered good vibes.

•  "It's early on back to school, but so far we're seeing really great results, not only from the beginning of back to school, but we're actually still getting benefit from the advertising that we did in Q1.

• "So one of the factors that is helping to drive some of the good numbers we're seeing is just an increase in brand awareness, both in the U.S. and in those newer international markets."

• "Not only did we end the quarter with just really good pace, but we have got a lot of stuff in store in the back half of the year. Q3 is when we do back to school. We have a lot of exciting things in pets."

• "... we got a slow start to the year. We feel really good about our pace coming out of that. We feel like we are on track to get in that range. What can I say? It is good momentum."

Here are some of my favourite reads from our friends over at Livewire:

• Is the ASX morphing back into an income market? Yarra's Marcus Ryan argues CGT reform, 15-year low payout ratios and a wave of retirees push income back above half of total returns. He likes Woodside, Telstra, TPG, Origin, Rio, Evolution, CAR, SEEK and Coles.

• Why ANZ is the pick of the Big 4 as the budget fallout bites: ANZ's mortgage applications are down 12% since the budget against CBA's 15% and Westpac's 20%. Elston's Joe McCarthy rates it a hold but the best of the majors on Nuno Matos' cost-out story.

• Growing dividend, $1 billion buyback: Telstra lifted underlying EBITDAaL 4% to $8.34b, raised the dividend 10.5% to 21cps and announced another $1b buyback. ClearBridge's Patrick Potts sees a cent of dividend growth a year, but rates it a hold on valuation.

• Ophir: The trades that worked in FY26 may not lead the next 12 months: Andrew Mitchell flags FY26's huge dispersion, with Small Ords materials up ~50% while consumer and comms fell close to 20%. He's nibbling at retailers, sticking with Bravura and Generation Development, and building out private markets research.

• Morgan Stanley's 5 big investment calls for the rest of 2026: Stay overweight equities with the US preferred, look past semis to power and AI infrastructure, and add Japan and Korea. Australia goes to near-maximum underweight on stagflation risk, though resources and copper stay in favour.