In this week’s video insight Stuart discusses how the banks are positioned with a less economic fallout from the COVID-19 pandemic than first anticipated. Since the pre-COVID market high on 20 February 2020, the banks have generated a loss of 7 per cent compared to a loss of 3 per cent of the broader market over the same period, despite share prices outperforming in recent months.  The Price to Earnings multiple of the banks have been falling for some time as a result of margin compression and higher capital requirements reducing their return generated on incremental equity invested. Will we see any special dividends from the banks as bad debt loan provisions are unwound?

The Montgomery Funds own shares in Westpac and Commonwealth Bank of Australia . This video was prepared 20 January with the information we have today, and our view may change. It does not constitute formal advice or professional investment advice. If you wish to trade these companies you should seek financial advice.