0350 GMT - Australian banks' technology spending is likely to come under scrutiny over the coming years as investors focus on the benefits of higher investment, according to the head of KPMG's local banking and capital markets practice. David Heathcote says fiscal 1H technology expenses across the big four banks rose 11% on year, with Commonwealth, Westpac, NAB and ANZ responding to customer demand for innovation and a focus on AI. This lifted the average cost-to-income ratio by 89 basis points. He points out that profits and dividends rose by 3.5% and 2.6%, respectively, across the same period. Consequently, he anticipates an "increasing focus on the majors' ability to generate an enhanced return from their investments." ([email protected])

0335 GMT - Orica's 1H earnings result is strong, underpinned by demand for high-margin blasting products that offset a fall in ammonium nitrate volumes, UBS analysts say. In a note, they describe Orica's cash flow conversion as solid and say it has the balance sheet capacity to support its A$400 million share buyback. First-half earnings per share is 10% ahead of consensus, they say. UBS has a buy rating and A$22.00/share target on Orica, which is up 8.2% at A$18.15/share. ([email protected]; @RhiannonHoyle)

0322 GMT - National Australia Bank is likely to cut its dividend two years from now, Macquarie analysts warn. They still see NAB as "the better horse in a slow race" between bank stocks, but tell clients in a note that limited inorganic capital generation and only 30 basis points of surplus capital lead them to predict a cut in the first half of the 2027 fiscal year. They think that NAB's margins will hold up better than those of its rivals amid lower interest rates, and see early signs of progress as NAB focuses on deposit growth and stability in proprietary mortgages. Macquarie keeps a neutral rating and A$35.00 target price on the stock, which is up 1.6% at A$36.45. ([email protected])

0117 GMT - ANZ's improved asset quality helps offset the disappointment of the lender's slight first-half revenue miss, Citi analyst Thomas Strong says. He tells clients in a note that ANZ's performance over the six months through March looks thematically similar to rival National Australia Bank, with better asset quality and improved costs. Strong thinks that investors will continue to focus on ANZ's costs and strategy ahead of its impending change of management and regulatory oversight. Citi has a last-published neutral rating and A$27.50 target price on the stock, which is down 2.4% at A$29.27. ([email protected])

0044 GMT - Contact Energy will have plenty of options once its takeover of Manawa Energy completes, but its balance sheet may need some help, suggests Forsyth Barr. Contact's combination with Manawa creates New Zealand's second-largest power generator, and analyst Andrew Harvey-Green says the size of its development pipeline also ranks second in the sector. "However, with Contact taking on additional debt, its net debt/Ebitdaf will be well above 3x in FY 2026 and FY 2027, meaning funding more developments on balance sheet will be difficult without an equity raise," Forsyth Barr says.([email protected]; @dwinningWSJ)

0036 GMT - Bega Cheese is advancing toward a target of A$250 million of Ebitda by FY 2028, and Bell Potter sees the potential for a stepchange in its share price as these efforts take hold. Bega Cheese's latest move involves consolidating its Strathmerton cheese processing and packaging operations into its existing site in Bega. Bell Potter has a buy call on Bega Cheese and a A$7.00/share price target, but thinks momentum could propel it higher. "If successful in delivering on these initiatives and sustaining its historical 10-year average trading multiple then the upside remains compelling, with a likely target of A$8.00-A$8.50/share," analyst Jonathan Snape says. Bega Cheese is down 0.2% at A$5.92. ([email protected]; @dwinningWSJ)

0028 GMT - While sales trends slowed in every division of Super Retail since its February update, Jefferies takes heart from signs that the auto market is becoming more rational after a period of intense competition. Supercheap Auto's like-for-like sales are down 0.1% in fiscal 2H so far, but management said there was some evidence of stability in April. Analyst Michael Simotas points out that April is always promotional in auto, but activity became more rational. Overall, Jefferies said the key disappointment in Super Retail's update was material unallocated costs in FY 2026. "While they should be one-off, FY 2026 net profit is likely to decline for the third year, which combined with Sports Direct overhang likely constrains share performance," the bank says. ([email protected]; @dwinningWSJ)

2255 GMT - National Australia Bank has a stronger earnings outlook than Westpac and enjoys far more valuation support than Commonwealth Bank, Morgan Stanley analysts say. Its relative attractiveness compared with its peers helps keep the analysts equal-weight on the stock following what they tell clients in a note was a first-half result with no surprises. Key operating trends were in line with their expectations, which the MS team says helps alleviate concerns about underlying margins, credit quality and capital that had emerged with NAB's 1Q update. They lift their target price 2.9%, to A$35.00. Shares are at A$35.87 ahead of the open. ([email protected])

0545 GMT - The risk that Peabody's planned takeover of Anglo American's metallurgical coal assets fails has materially increased, according to Jefferies analyst Christopher LaFemina. "In the case of Anglo, this deal not closing would be a significant negative, as the value of these assets would have materially declined from the agreed transaction price," LaFemina says. For Peabody, it would be a positive, "as securing [circa] $2 billion of needed long-term financing in today's coal market environment would be very expensive," he says. Peabody's share price has fallen sharply since the deal was announced, and metallurgical coal prices have collapsed, says LaFemina. The up-to $3.78 billion deal has come under scrutiny after a recent fire at one of the mines Anglo American intends to sell. ([email protected]; @RhiannonHoyle)

(END) Dow Jones Newswires