Increasingly positive. In this report, we revisit those themes to reflect on whether theywould have a larger or smaller impact as well as any new themes that we think areemerging. In general, we find that the majority of positives we highlighted for banks wereas strong if not stronger than originally considered and the negatives were not as large(RWA inflation and capital being one such example). We put this down to not just thesubstantial government and regulatory support, but acknowledgement that managementtake action and do not sit on their hands.

ROEs at the upper end of the range. Our review leads us to consider that the sectorROE is more likely to be towards the upper end of the range initially estimated postpandemic, say 9-13% and in fact may progress beyond the top-end in some scenarios.With our forecast FY23F ROEs of 10-13% across the major banks and depending on thecost of equity, this results in valuations that are at a premium to book. We believe this to besupportive of our view that bank shares continue to grind higher. Our order of preference isWBC (OUTPERFORM), NAB (OUTPERFORM), ANZ (NEUTRAL) and CBA (NEUTRAL).