David Ellis: The recent reporting season for the four major banks was pretty good overall. We saw Commonwealth Bank with its first half 2019 results little bit up on the previous period and importantly, the dividend, the $2 per share fully franked dividend, was retained. So, there was some expectation that that may have been cut.

The other three major banks, so that's National Australia Bank, ANZ and Westpac, provided brief trading updates. So, for those three banks, that's for the first quarter 2019 financial year. Westpac came in with a cash profit of around $2 billion.

ANZ did not provide an update on the profit but provided some key updates on capital and loan quality. Similar story with National Australia Bank with – their profit was okay, their cash profit for the quarter.

The highlight of all four major banks was continued strong asset quality. So, loan losses, loan losses remain at historical lows, particularly for ANZ, NAB and Westpac.

So, margins were under a bit of pressure from higher funding costs, wholesale funding costs and from intense competition for new residential lending. But overall, the results were overshadowed by the final report of the Royal Commission that came out early February. And particularly, for National Australia Bank with the announcement of the resignation or the departure of NAB's CEO Andrew Thorburn and the eventual departure of Chairman Dr. Ken Henry.

So, there's a lot of uncertainty at National Australia Bank about who will replace Andrew Thorburn and the Chairman Dr. Ken Henry. And as an interim measure Phil Chronican, a highly regarded executive in Australia, he is Acting CEO at National Australia Bank.

So, looking forward, the housing market continues to weaken. Credit growth is soft. And then general economic conditions that appear softer than what experienced last year. So, the outlook for earnings growth is modest at best and we are predicting only very, very modest earnings per share growth.

However, we do think dividends are sustainable at these levels despite the high payout ratios, particularly for National Australia Bank, which could change, of course, with the new chairman and new CEO.

But from a share price point of view, the four major banks have done quite well since the end of December. On average their share prices are up about 15 per cent with ANZ up over 21 per cent since late December and Westpac up about 16 per cent and NAB and CBA up about 13 per cent each or so. So, that's been a positive and that has surprised a lot of people, I think, particularly with the Royal Commission – with the final report of the Royal Commission.

But we expect further improvement over the next little while and our preferred major bank is Westpac and it's trading at about 18 per cent below our fair value and National Australia Bank is trading around at similar sort of levels below our fair value. ANZ is trading close to fair value and Commonwealth Bank is trading at about 8 per cent below our fair value. So, I've been very pleased with the move in the share prices over the last two months or so and I expect further improvement in the near term.