Are BNPL Shares Falling Pushing ASX Banks Higher Today?

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It’s been a bumpy ride for ASX stocks and the S&P/ASX 200 Index (ASX:XJO) so far this Tuesday. At the time of this writing, the ASX 200 gained 0.17% to just over 6,610 points after initially surging to nearly 6,650 points this morning. But it’s a bit of a different story when it comes to ASX banks today.

Most ASX bank stocks are doing very well on Tuesday. Take the Commonwealth Bank of Australia (ASX: CBA) share price. It is currently up 0.98% at $93.46. National Australia Bank Ltd (ASX:NAB) did even better, rising more than 1.3% back to above $28. The gains are more attenuated for Westpac Banking Corp. (ASX:WBC) and Australia and New Zealand Banking Group Ltd (ASX: ANZ), but both are still in the green.

We haven’t heard from the banks themselves today that could easily explain why some are performing so well. However, we have news from the buy now, pay later (BNPL) space that could play a role here.

It’s been a tough few weeks (and months) for ASX BNPL stocks. Earlier this week, my fellow Fool, Brooke, looked at how certain BNPL actions, including Zip Co Ltd (ASX:ZIP) and Sezzle Inc. (ASX:SZL), fell more than 90% in fiscal year 2022. Indeed, Sezzle share price lost a painful 97% in the past fiscal year.

Are ASX Bank shares getting a BNPL boost?

BNPL and bank shares are of course not interchangeable. But they are also not completely independent of each other. On the one hand, BNPL products are undoubtedly in competition with credit offers from banks, most obviously credit cards. It can be said that the BNPL’s successes come at the expense of the banks.

This may be why we are seeing some strength in ASX bank stock prices today. For this Tuesday, we have learned that the long considered merger that was planned between BNPL players Zip and Sezzle has been scrapped. As my colleague Fool covered this morning, Zip and Sezzle agreed to part ways at the altar.

This merger was first published in February. It reportedly saw Zip buy out Sezzle for what was then a $491 million deal, all in certificates. This would have allowed Sezzle shareholders to receive 0.98 Zip shares for each Sezzle share held.

But as both companies’ share prices fell in the months following the announcement, concerns grew and ultimately caused the deal to sink. So perhaps investors are treating the loss of what would have been a more consolidated and larger BNPL share as a plus for ASX banks today.

In the case of the ABC, the news could be particularly positive. CBA owns a stake in the Swedish giant BNPL Klarna. It has built its position in 2019 and 2020, although it may face a $2 billion impact on its investment in 2022. If Klarna doesn’t have to compete with a merged Zip and Sezzle, it could be a good news for the ABC.

Whatever the reason, it was certainly a good day to hold ASX bank stocks today.

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