“We view Westpac (WBC) as having the greatest potential for return on equity improvement among the major banks if its business transformation initiatives prove successful,” Raymond said.

“The sources of this improvement include improved loan origination and processing capability, cost reductions (including from divestments and cost-out), rapid leverage to higher rates environment, and reduced regulatory credit risk intensity of non-home loan book.

“Yield including franking is attractive for income-oriented investors, while the return on equity (ROE) improvement should deliver share price growth,” Raymond said.

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