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Does It Get Any Better For The Big Four?  

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I find the question

Do the banks have the ability, given the sustained government and consumer pressure, to deliver record profits again next year?
not to make sense.

I also note that Switzerland has two major Banks (and a host of small/ regional Cantonal banks as well). But what would they know about banking?

Also, if competition was so great in the brave world of deregulation , where are these competitors now? The answer, of course, is they weren't sufficientlly strong to survive, reliant as they were on short-term securitisation to fund long term commitments. Always a worry. And allowed to be bought by the bBig 4 to save Political face.

 

By definition, if Banks only have capitalisation approaching 9 -10%, it is, as they say, a matter of Confidence. I have more confidence in our banks than I have in this Nation's political leadership. That said, management remuneration is excessive.

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Yes to my way of thinking, the wages they pay their managing EMPLOYEES , is obsene.

To get bonuses for being in business, (govenrment regulated one at that that).

Record profits, of course,

Inflation takes care of that and with guaranteed super contributions, cream on top.

Any one want some shares in NEBO bank.

If we can get the float away, the nice people in Canberra will look after us. ;)

Regards,

Nebo

 

 

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But nipper--consider this:

 

Given the US has an EFFECTIVE cash interest rate of minus 3, and we have an effective cash interest rate of plus 4.75% meaning the EFFECTIVE interest rate differential or gap between the US and oureselves is a simply massive 7.5%.

 

Imagine yourself sitting on a pile of cash in the US earning nothing, and you can see a return in Australia of over 7% what would you do--but more importantly---- who would you entrust with your cash?

 

The big four OZ banks of course, they will find a profitable way to relend those US cash piles, ensuring ongoing and increasing profiits for all participants--IMHO.

 

(The US deny they have any inflation whereas we accept we have and are determined to attempt to keep that emerging inflation in check with ever increasing base interest rates)

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Reserve Bank minutes blow holes in political debate on interest rates

 

THE Reserve Bank has blown the populist bank-bashing debate out of the water.

 

The minutes of its November 2 board meeting show that it increased its cash rate by 25 basis points knowing that the private banks were likely to slug their mortgage borrowers more again.

 

 

http://www.theaustralian.com.au/business/o...6-1225954376842

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I find myself in agreement with nipper in so far as it's not the right question. In

fact it's a "have you stopped beating your wife question".

Whether the banks make "record" profits next year, ie better than last year, is

hardly important. I'm damn sure they won't make losses.

Any attempt to control the rates is likely to be litigated ad infinitum.

In the meantime, lack of competition & eventual upturn in housing etc is sure to see

them continue to make healthy profits.

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How about we address some of the myths that the media are beating up.

 

  • The Aussie Government bailed out our banks
Yes i've read this somewhere. No Australia banks have been bailed out.
  • The Australian Government Guarantee saved our big banks.
No doubt that given their reliance on overseas markets for money, our big 4 banks would have had difficulty in raising money in the dark days of late 2008. This was made more difficult by OTHER governments guaranteeing the liabilities of their financial systems. I'm sure at AA, they still could have raised it but it would have been terribly expensive and this would have been ultimately passed onto the Australian borrower. In the end, the Australian government had no choice to match the government guarantees of other countries otherwise money would have flooded out of our banks and into banks of other countries with guarantees.

 

What commentators neglect to mention is that without the GG, I'm sure the various piddly credit unions like bankstown credit union, electricity credit union, manly-warringah CU etc would have fallen over or had to merge (at the medium end of town, Suncorp was on death's door). Those with lots of money are sticking in $1m in term deposits in these CUs with the comfort that they are government guaranteed. There is no doubt that this 'hot money' will disappear in 11 months time when the $1m GG goes.

 

  • St George and Bankwest should not have been allowed to merge with one of the big 4.
I don't know enough about Bankwest, so i'll just stick to St George. St George relied very heavily on securitisation markets which disappeared with the GFC. Their business model would not have survived the GFC.

 

  • US interest rates are at 0.25%. Our banks are lying when they say overseas borrowing rates are higher than before. They should borrow at 0.25% and lend it here in Australia.
But you have forgotten hedging back to AUD. It is still more expensive to borrow overseas than it is here.
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  • 3 weeks later...

Suti,

Lending rates for banks have risen, if you bothered to do any reasearch you would see that ANZ Net interest margin has fallen to 2.47% from 2.74% 10 years ago.

Also THEY ARE NOT LYING!!!!

if your so jealous and think theyre making huge profits go buy their stock.

however i HATE how we pay the bank ceo's so much

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