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CBA, COMMONWEALTH BANK OF AUSTRALIA
nipper
post Posted: Oct 26 2020, 01:43 PM
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In Reply To: nipper's post @ Sep 12 2020, 06:59 PM

QUOTE
Due to the reduced economic activity expected in the next couple of years, the Reserve Bank is likely to keep interest rates low. .... this is not good news for Australian banks since they price off of the short end of the curve. For bank net interest margins to increase, short end rates need to go back up, which means the RBA needs to feel so good about the economy that they start to raise the cash rate again. And because banks are highly leveraged, changes in profitability are magnified. So, we have got bigger issues than just the bad debts that are going to come through in the next couple of years.

Add to this competition. Banks have had a four pillar structure and that's been supportive of returns. However now you have got competitive threats from companies outside of the banking sector, mainly tech firms. None of these tech firms have a banking licence, or want one, and yet all of them are making incursions into financial services, mostly in the payments area. This is not because they want to be banks; it's because they want to reduce friction for their core services. Amazon wants to streamline payments because it wants to make it easy for anyone to sell anything on their platform. Combine that with smaller Fintechs who are picking off various individual services from the banks and there's a real erosion of the banks' ability to defend their turf.

All this means that the outlook for the banks overall as a sector is not particularly compelling but there are still positives. We're not going to see strong dividends paid out for a while, but the banks do still return their cost capital. There are also important differences between them, so our approach is to look at relative ways that to generate returns..........

Commonwealth Bank is another opportunity. Fintech disrupters typically seek to raise $20m to $50m to get themselves up and running. Against this, CBA is spending $150m a year, just on its app. The CommBank app gets up to 10 million logins a day, making it one of the most used apps in the country. Commonwealth's reinvestment into the app will help the bank retain relevance to its customers, despite the attempted incursions of Fintechs.
https://www.sharecafe.com.au/2020/10/19/sur...ether-thriving/



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"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne
 
nipper
post Posted: Sep 12 2020, 06:59 PM
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Commonwealth Bank


Earlier this year Commonwealth Bank completed a small restructure that moved its private bank from its business bank to the retail bank (but more of that later). Commonwealth Private focuses exclusively on wholesale or sophisticated investors (defined as individuals with income of more than $250,000 or assets of more than $2.5 million).

The sophisticated investor regime comes with fewer protections and a lower compliance burden than those in place for retail investors while providing clients with priority entree to opportunities such as IPOs, capital raisings and hard to access investment vehicles.

Angus Sullivan, Commonwealth Bank's group executive of retail banking, says CBA sees a big opportunity with its private bank and plans to invest $100 million in staff and infrastructure over the next three years.

QUOTE
There are around twice as many customers of our retail bank who qualify than there are customers of our private bank. We see a huge opportunity here to grow the customer base and attract the best private bankers, Sullivan adds.


CBA is cagey about the numbers but Commonwealth Private is understood to have between 10,000 and 20,000 customers. The $100 million investment is earmarked for another 100 frontline staff, taking its staff numbers to 400 and a soon-to-be released Commonwealth Private-only mobile app.

Angus Sullivan says while many of the revelations from the Hayne royal commission were challenging, they were a wake-up call. Supplied

The move of private to the retail bank is a big plus, Sullivan says, because technology has long been one of CBA core strengths and the private bank can now leverage that.

QUOTE
We are going to have the best culture and the best technology. We've got a phenomenal franchise here we are going to take what we have done on the lending front and apply it to the private bank.


Because Commonwealth Private deals only in wholesale clients, it doesn't need to provide customers with statements of advice. The cost of advice and management is on application, so it's difficult to line up against rivals.

As a client of Commonwealth Private (or indeed any of the private banks), you can expect the execution of domestic and international share trades, global fixed income, access to hedge funds, multi-currency accounts and all manner of lending services. But you will pay for it. Execution isn't cheap across any of the big four private banks.

The question is, will investors go for it? After the bollocking the big four banks received at the Hayne royal commission, why wouldn't an investor seek independent advice?

CBA is free of many of the conflicts it used to have. Insurance and global asset management have been sold. But it still retains the superannuation business and investment platforms. Sullivan says while many of the revelations from the Hayne royal commission were challenging, they were a wake-up call. You've got to do better than that, he adds.





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"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne
 
early birds
post Posted: Aug 12 2020, 09:28 AM
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https://www.sharecafe.com.au/2020/08/12/cba...end-chopped-50/

That news should help lift CBA shares on Wednesday (they closed at $74.70 on Tuesday), despite a massive sell-off in gold on Wall Street overnight.

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how much it can go up?? or Mr. market will " sell into news"?? unsure.gif



 
nipper
post Posted: Jul 31 2020, 10:20 AM
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Commonwealth Bank shareholders have escaped the harshest interpretation of the clampdown on dividends after the prudential regulator confirmed a new 50 per cent cap on payout ratios would only apply to second half earnings and not the full year.

The new guidance to cap payout ratios at 50 per cent of earnings represents a softening of the APRA April edict to defer or materially reduce the payments but will hurt shareholders used to years of payout ratios between 75 per cent and 95 per cent. The decision will see the second-half dividend payable to CBA shareholders capped at 50 per cent of earnings after collecting a normal first half dividend before the crisis descended.

The prudential regulator wants banks to deploy capital buffers to support households and borrowers throughout the crisis. In the letter it said it expected banks to demonstrate ongoing lending capacity to the regulator as well. .The order will see the level dividends paid out by the banking sector slashed in comparison with previous years but the impact across the banks will be uneven due to a range of factors, including the end of their financial year and capital position.

While CBA shareholders face a lower dividend this year when compared to to last year, they are in a better position than shareholders in rival banks who may have two dividends subject to the new cap. For example, last year a CBA shareholder with 10,000 shares received $43,100 in dividends across the two halves, which saw payouts of $2 a share and $2.31 a share paid. In 2020, a CBA shareholder with 10,000 shares will have already received $20,000 after the first-half dividend of $2 was paid out. Following the revised guidance, however, shareholders are in line to receive up to 93 a share for the second half, according to Morgan Stanleys Richard Wiles, or total dividends of $29,300, a reduction of 32 per cent on the previous year.



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"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne
 
nipper
post Posted: Jul 28 2020, 04:33 PM
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Tackling Afterpay

CBA also provided further detail on its plans to take the fight to the $20 billion buy now, pay later leader Afterpay. The bank has invested $US300 million ($420 million) for a 5.5 per cent equity stake in Sweden based Afterpay rival Klarna and Mr Comyn said the pair would work closely, including referring CBA customers to help grow Klarna's share of the booming market.

QUOTE
We obviously have a lot of reach across our customer base which we are going to progressively try to integrate more tightly, and give more value to our CBA customers and likewise, make that process of signing up and integrating with Klarna easier,
Mr Comyn said.

The bank said the Klarna app had been downloaded by 270,000 Australians. Only 80 merchants have been added to the platform, including online retailer Kogan, but CBA expects this to climb. Despite the low number of merchants, Mr Comyn said the Klarna numbers were broadly in line with expectations, we have pretty lofty expectations generally.

CBA online investing arm, Commsec, is also capturing growth during a period of extreme volatility in global sharemarkets, with 400,000 new accounts established on the platform over the last year.

CommSec Pocket, a micro investing app launched a year ago that allows customers to invest sums as low as $50 in ETFs, saw a rise in activity, with $180 million invested by 100,000 users since launching last year.



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"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne

Said 'Thanks' for this post: early birds  
 
nipper
post Posted: Feb 14 2020, 02:06 PM
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In Reply To: nipper's post @ Feb 12 2020, 06:56 AM

Ticking. Firing on multiple cylinders. Now solidly above $90



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"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne
 

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nipper
post Posted: Feb 12 2020, 06:56 AM
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QUOTE
â–º Statutory net profit after tax (NPAT) of $6,161m, up 34% including $1,688m from the gain on sale of CFSGAM
â–º Cash NPAT of $4,477m, down 4.3%
â–º Cash return on equity (ROE) of 12.7%
â–º Operating income of $12,416m, flat on 1H19, up 3.5% sequentially
â–º Group net interest margin (NIM) of 2.11%, up 1 basis point (bpt) on 2H19
â–º Operating expenses of $5,429m, up 2.6%
â–º Loan impairment expense of 17 bpts of average GLAA (14 bpts ex. drought/bushfire provision), up 2 bpts
â–º Deposit funding of 71%, up 2%
â–º Common Equity Tier 1 (CET1) capital ratio of 11.7% (APRA), 17.5% (internationally comparable)
â–º Interim dividend per share of $2.00

OK OK. Ticking over in a challenging environment



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"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne
 
blacksheep
post Posted: Nov 12 2019, 02:55 PM
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In Reply To: blacksheep's post @ Nov 12 2019, 10:06 AM

CBA over-valued, says analyst
By David Scutt
QUOTE
The Commonwealth Bank of Australia (CBA) remains a sell despite a “strong” first quarter trading update, according to UBS analyst Jonathan Mott.

“Operationally, CBA is continuing to outperform peers,” Mr Mott said. “However, CBA is now trading on 17 times FY20E which makes it one of the most expensive developed market banks in global history, despite a falling earnings per share profile as net interest margins come under pressure from ultra-low rates and credit charges continue to slowly normalise.”

Despite the solid trading update, Mr Mott doesn’t expect that resilience to last longer-term.

“While we do not forecast quarterly, this was a good number, around $150m above the 'run-rate' embedded in our 1H20E estimates,” he said, referring to the bank’s cash NPAT of around $2.3 billion. “That said, we are always cautious to extrapolate quarterly updates which are inherently volatile, and Q1 is seasonally stronger at CBA."

Based on that view, UBS retains a sell rating on the stock with a 12-month price target of $70. CBA shares are up 0.6 per cent to $80.495 in late trade today.




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The herd instinct among forecasters makes sheep look like independent thinkers. Edgar Fiedler

If the freedom of speech is taken away then dumb and silent we may be led, like sheep to the slaughter. George Washington
 
blacksheep
post Posted: Nov 12 2019, 10:06 AM
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Better resultsthan some expected
.1Q20 Overview
QUOTE
• Unaudited statutory net profit of approximately $3.8bn2,3 in the quarter, including a $1.5bn gain on sale of CFSGAM4
.
• Unaudited cash net profit from continuing operations of approximately $2.3bn2,5 up 5% ex notable items.
• Operating income up 3% on a day-weighted basis due to lower basis risk, one-off items and volume growth.
• Operating expenses up 2% (excluding notable items), reflecting higher staff costs and IT amortisation.
• Loan Impairment Expense of $299m, or 16 basis points (bpts) of average GLAA6
• Improved arrears across consumer portfolios.
• Troublesome and Impaired Assets slightly higher, with pockets of stress similar to those highlighted at the FY19 results.
• Strong funding position maintained, with deposit funding at 69% and the Net Stable Funding ratio at 112%.
• Strong CET1 ratio of 10.6% after 2019 final dividend payments (-90bpts) and organic generation of 35bpts ex one-offs7

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--------------------
The herd instinct among forecasters makes sheep look like independent thinkers. Edgar Fiedler

If the freedom of speech is taken away then dumb and silent we may be led, like sheep to the slaughter. George Washington
 
nipper
post Posted: Nov 3 2019, 12:05 PM
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https://www.firstlinks.com.au/article/shoul...0572ff-83781601

CBA Perls XII
QUOTE
CBAPI’s issue margin of 3.00% provides a relatively attractive premium to our current fair value curve of major bank AT1 securities in the 7.5-year term to call range.

Following completion of the bookbuild, CBA has finalised the issue size at $1.25bn and a margin of 3.00%. Initially only seeking $750m and an indicative margin range of 3.00% to 3.20%, investor demand was clearly strong. The hunt for yield continues, triggered by low cash rates and growing expectations the RBA will cut further and even implement some form of quantitative easing in Australia.

Our near-term outlook for hybrid pricing remains constructive. The major banks are profitable, have strong AT1 capital positions and need to raise more Tier 2 Capital.....
Morningstar.

- it ain't a term deposit; risk is much higher



--------------------
"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne

Said 'Thanks' for this post: early birds  
 
 


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