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Muted Response by Market to CBA Interim

By Glenn Dyer |

The interim dividend of $1.50 a share was better-than-expected (analysts thought $140 to $1.45) and the $3.9 billion cash profit was in line with expectations.

 

And the bottom line was that the bank has so far survived the pandemic in good shape, with more capital and a handle on bad debts, even though another $883 million was tucked away for a rainy day , which could start when the JobKeeper and JobSeeker payments end in late March.

 

At the peak CBA had 145,000 home loan customers with $51 billion of loans and 67,000 small and medium-sized businesses with $15.7 billion of loans deferring their repayments. As of January 31, home loan deferrals were down to 25,000 customers and $9 billion of loans, and SME deferrals to 2,000 customers and $300 million of loans.

 

CBA common equity tier one capital ratio of 12.6% is a full percentage higher than it was at June last year (the minimum is 10.5%) ... and can absorb whatever losses might flow without generating stress within the financial system.....

 

 

https://www.sharecafe.com.au/2021/02/10/mut...to-cba-interim/

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The number of first-time investors using Commonwealth Bank’s veteran trading platform has jumped 125 per cent since the beginning of the coronavirus pandemic as young Australians have bought in to the so called Robinhood phenomenon rocking global markets. New data from CommSec shows the number of customers with no trading experience using the platform more than doubled from 8 per cent before February last year to 18 per cent at December.

 

More than four in five (83 per cent) of these new customers are under the age of 44. That represented a 17 per cent jump in usage of the 24-year-old platform by Millennial, Generation X and Generation Z consumers. First-time traders were found to account for about 10 per cent of all trades on the CommSec platform over the period, up from just 4 per cent before the pandemic.

 

CBA announced last week that more than 230,000 new accounts were opened to trade stocks on CommSec or through its Pocket app over the half year.

reputation count .... squeezing the upstarts. ... because the link with the CDI Account will keep the eyeballs and fingers on CBA

 

 

 

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Commonwealth Bank will undercut Afterpay and conduct credit checks to reduce the risk of customers overcommitting themselves in the biggest competitive response of a major bank to the wildly successful buy now, pay later phenomenon.

 

CBA's new product, CommBank BNPL, will allow up to 4 million of its retail customers to pay in four instalments. CBA aims to outflank the leaders of the rapidly growing buy now, pay later sector, such as Afterpay and Zip Co, but analysts are unsure whether the bank will be able to catch them after ceding so much territory.

and what has happened to Klarna? Some $350M later??
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CBA getting close to $100.

 

 

And I noticed Klarna is hooking up with Flybuys; Got a promotional blurb (which I won't take up) today. More loyalty capture, and I get the feeling only the big players will be left standing in a year or two . Incumbency brings advantage.

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and a big day: Commonwealth Bank will pay a final dividend of $2.00 per share, up 104 per cent on the year before. Full year dividends finished at $3.50 per share on 71 per cent of cash earnings from continuing operations of $4.89 per share. As well, it will commence a $6 billion off market share buyback and distribute $2.1 billion in franking credits.

 

 

Its net profit attributable to equity holders climbed 6 per cent to $10.2 billion on revenue up 2 per cent to $24.4 billion. On a continuing operations basis, cash net profit climbed 19.8 per cent to $8.66 billion and statutory net profit climbed 19.7 per cent to $8.84 billion.

 

Its net interest margin dropped 4 basis points over the year to 2.03 per cent. Total provisions for loan impairments finished at $6.1 billion, versus $6.24 billion.

 

As of June 30 in the home loan book, the average loan to value ratio finished at 49 per cent, versus 53 per cent. Loans in negative equity equalled 1.2 per cent, versus 3.8 per cent. The proportion of interest only loans also fell to 12 per cent from 16 per cent.

$106.50 and likely to go above that level today

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There was $24 billion worth of demand for the $6billion in shares offered in the CBA buyback just completed, forcing the bank to scale back investors by 79.4 per cent. The bank will buy 67.7 million shares from investors or 3.82 per cent of the shares on issue and cancel them, increasing the share of profit attributable to each remaining CBA share.

 

CBA announced the final buyback discount of 14 per cent on shares with a face value of $103.05 this morning. Investors will receive $88.62 for each share successfully tended including a $21.66 capital component and a fully franked dividend of $66.96.

 

Due to the strong demand for the buyback, a scale back of applications was required. In line with the terms of the buy-back booklet, the scale back was structured to minimise disadvantaging shareholders with a small number of shares, the bank said in a statement.

 

Eligible shareholders who offered to sell their shares at a 14 per cent discount or as a final price application, had a priority allocation of 100 shares (or lesser number) bought back before any scale back was applied. Applications for more than the priority allocation were accepted, but scaled back by 79.4 per cent on a pro rata basis, CBA said.

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