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The Banks
Does It Get Any Better For The Big Four?
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nipper
post Posted: Nov 1 2019, 06:59 PM
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The ANZ result showed the impact of slower credit growth and compression of the net interest margin (NIM), a major earnings driver, as a result of falling interest rates. ANZ also announced that its dividend will be held flat and franked at 70.0%, which may have disappointed shareholders.

The increased costs may prove to be a trend in the banking sector and we will watch closely as the other banks report their results. Specifically, Westpac (ASX: WBC) and National Australia Bank's (ASX: NAB) results will provide an indication of whether the impacts were limited to ANZ or have spread to the rest of the sector. The combination of higher costs, lacklustre credit growth and regulatory capital risks might see boards reduce dividends for banks with tighter capital ratios.
- common fundie view



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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  Pendragon  
 
nipper
post Posted: Oct 25 2019, 07:56 AM
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Three of the big four banks will report annual results in the coming fortnight and each is expected to unveil a measure to top up its capital position.

ANZ Banking Group, National Australia Bank and Westpac Banking Corp have four options; dividend cuts, underwritten dividend reinvestment plans, equity raisings and/or asset sales.

CBA is the best set of the big-4, with ANZ still above the 10.75% CET1 capital level but, on the assumption a dividend cut is unpalatable, the other two might go to the market. And three of the four options require the help of an investment bank.



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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  
 
early birds
post Posted: Oct 2 2019, 05:30 PM
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In Reply To: early birds's post @ Sep 30 2019, 10:01 AM

https://www.afr.com/policy/economy/frydenbe...y_Sent=02102019


All the banks have now passed on rates. NAB said it would cut rates for owner-occupiers and investors paying principal and interest by 15 basis points, while the CBA said it would cut as little as 13 basis points. ANZ said it could cut by 14 basis points while Westpac will pass on 15 basis points.

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all passed on partially !!! lmaosmiley.gif



 
early birds
post Posted: Sep 30 2019, 10:01 AM
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https://www.afr.com/street-talk/cba-bank-of...y_Sent=30092019

It is understood ICG’s bid was backed by about a $200 million debt package, including a $160 million-odd term loan and separate working capital and capital expenditure facilities. CBA and Bank of China were the two biggest lenders in the syndicate. ICG was advised by Lazard.

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infrastructure is the next aussie economy focus going forward.......
my ramping----i bought some bank of china from hong kong market with my CFDs account, as the stock is more than 30 % below it's mainland price and yield around 5---6%/. it's really under valued...thanks to current HK political unrest that got people sell things undiscriminately .



 
nipper
post Posted: Sep 24 2019, 08:20 AM
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UBS analyst John Mott says any [interest rate] cuts from here simply decimate bank earnings because they can’t cut deposit rates any lower.

CBA, by way of example, has one quarter of all deposits on 25 basis points or less and its most popular product, NetBank Saver, is at 15 basis points.

Deposits fund about 60 per cent of home loans, so if the bank is earning zero or less on deposits it isn’t making much on its home loans.

In a recent note, UBS’s Mott noted the banks are also losing control of the home loan market, with just 37 per cent of all home loans generated directly by banks’ own sales channels. This is down from 48 per cent in 2013.

While the big four banks control 79 per cent of mortgages, they are increasingly acting as the underwriters for home loans generated by the brokers.

- if RBA cuts next week, it is possible we'll see some mortgage offerings starting with a 2



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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: Sep 11 2019, 08:19 PM
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QUOTE
Banks are back, with the sector up almost 13 per cent this year, but further gains are likely to depend on an ongoing housing market market recovery as interest rates go lower.

Large Australian lenders rallied this year after the federal election result in May, which was quickly followed by rule changes from the prudential regulator, and the Reserve Bank of Australia's two interest rate cuts.

Commonweath Bank is up 11.3 per cent to $80.60, National Australia Bank is up 19.6 per cent to $28.79, Westpac is higher by 18.3 per cent to $29.61 and ANZ shares have rallied 12.7 per cent to $27.46.

The sector's advance dates back to early in the year, when the royal commission into the financial services sector wrapped up without demanding onerous penalties of lenders.

- reports of their demise are somewhat exaggerated



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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
 

sentifi.com

Share Cafe Sentifi Top themes and market attention on:


blacksheep
post Posted: Jul 3 2019, 08:13 PM
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Interesting read - HERE’S SOMETHING FOR BANK INVESTORS TO CONSIDER
extract
QUOTE
The big four have capitalised significant amounts of spend for many years, which they classify as software investment. Every 3 or 4 years, they generally take a large write-down of this asset, and the cycle starts all over again. These periodic impairment charges also act to boost reported earnings by reducing the amortisation charge in future periods. While the companies generally claim these are non-cash charges, this is a misleading statement as they reflect a write-off of cash investment/spend in prior periods. So, while they do not necessarily relate to cash payments in the current period, it is still a charge against real capital that was invested by the company.

Because the write-downs are generally treated as a one off by the market, this spend is quite often never really fully factored into analyst valuations.

read more - https://rogermontgomery.com/heres-something...rs-to-consider/



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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: Jul 2 2019, 04:54 PM
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In Reply To: nipper's post @ Jun 28 2019, 11:08 AM

QUOTE
so, how long can this ... rally last?

Not long.... the "fractional banking" system doesn't lend itself well to declining interest rates.
QUOTE
Investors fled the major banks over fears their margins would be squeezed after the Reserve Bank of Australia cut the cash rate to a record low 1 per cent.

... The local sharemarket had been trading firmly higher through the day and initially jumped after the RBA cut rates to a fresh record low of 1 per cent. However, sharemarket's gains were crimped after investors in the major banks headed for the hills.

"The closer interest rates get to zero the larger the impact of each rate reduction on banks net interest margin," said Lazard Asset Management portfolio manager Aaron Binsted.

"In this low credit growth environment, a further rate reduction, even with less than 100 per cent pass through to borrowers, is enough to dent earnings growth across the big four."

The major banks wiped a collective 21.8 points from the benchmark index. Commonwealth Bank shares fell 1.5 per cent to $81.05, Westpac slid 1.6 per cent to $27.93, ANZ closed 1.5 per cent lower at $27.87 and NAB dropped to $1.2, down 26.49 per cent.

The smaller lenders were also weaker.
market was up, otherwise.



--------------------
"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: Jun 28 2019, 11:56 AM
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In Reply To: nipper's post @ Jun 28 2019, 11:08 AM

Discussion on Banks a while back (June 11) between Jeremy Hook from TMS Capital hosts Jun Bei Liu from Tribeca Investment Partners and Sam Granger from Totus Capital, who give their take on whether the banks are "back in town," while also naming their standout pick among the Big Four.- conclusion NAB was standout pick.

QUOTE
Well our panel is joined with the enthusiasm with the bank sector of late, and thinks there is an opportunity there, and particularly on NAB.


Read more - Are the banks back in town? - https://www.livewiremarkets.com/wires/are-t...campaign=buffer



--------------------
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: Jun 28 2019, 11:08 AM
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In Reply To: nipper's post @ May 27 2019, 04:32 PM

So, how long can this Bank share price rally last? CBA nudging $84, ANZ and WBC $28.50 and NAB closing on $27.
- No fundie has a good word to say, and yet?




--------------------
"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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