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The Banks
Does It Get Any Better For The Big Four?
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nipper
post Posted: Yesterday, 02:39 PM
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Last few days have been amazing
QUOTE
JP Morgan financial sector analyst Andrew Triggs says the impressive surge in Australian bank share prices this week is "long overdue", with the sector having underperformed the S&P/ASX 200 by 19 per cent from February 21 to May 25.

After a further rise of between 3.8pc and 6.1pc today, the four majors are currently up almost 20pc this week, so it could be said that its underperformance versus the index has been broadly corrected.

Mr Triggs says reasons for the recent strength include:
... reduced tail risk on the domestic economy;
... positioning is light, with domestic institutional investors net sellers of the banks in the three months to March 31 and heavily underweight financials;
....valuations are "undemanding" with unprecedented discounts to book value; and
... Quant fund rotation (from Growth to Value).

"Whether the recovery continues remains to be seen but 1x price-to-book value may be a "ceiling" in the short-term (ex-CBA) given ongoing uncertainty and structural headwinds the sector faces," Mr Triggs says.

In his view NAB is best positioned to benefit from a "less bad" domestic economy, he has an overweight rating on the stock. Westpac is preferred over ANZ in his major bank pecking order, with CBA the bottom pick at Underweight.

... wow, no-one banging on about 'overweight mums and dads"

....
QUOTE
It's been a long time since the financial media in Australia have used words like stunning, staggering and astonishing in the same sentence as Australian banks.

[Yester]day's Chanticleer column in the Australian Financial Review used all three of these adjectives.





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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: May 4 2020, 07:45 PM
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Tricky times, but so far so good
QUOTE
The banks are battening down the hatches for a hard slog out of the crisis and boards have had to delicately balance the interests of retiree shareholders reliant on dividend income with banking regulator's demand that they maintain capital strength.

Ratings agencies have backed the banks' focus on stability and strength. After the Westpac result, S&P Global Ratings said a “strong capital base, its decision to defer its interim dividend and the strength of its domestic banking franchise provide a good buffer for the Australian major bank to absorb higher loan loss provisions".




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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: Apr 11 2020, 10:12 AM
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Lower dividends and no capital management look very likely in 2020 and beyond for banks, listed insurers and other financial groups for the rest of 2020

QUOTE
APRA, the financial regulator, has told banks, insurers, and other financial groups to think carefully about deciding whether dividends can be paid to shareholders over the rest of this year and into 2021.

Companies will have to be sure that paying a dividend won’t damage the company’s financial strength and when a decision is made to greenlighted a payout, it will have to be lower and dividend reinvestment plans will have to be used to lower the cash outflow wherever possible

The statement means APRA has joined the Reserve Bank of New Zealand, the Bank of England and European Central Bank in telling banks and financial groups to limit or suspend dividends and capita management plans such as buybacks.

The RBNZ, Bank of England and ECB have gone as so far to tell banks not to payout dividends, while APRA’s advice is less firm, but it is obvious that it is directed at the major banks, three of which ... NAB, ANZ, and Westpac .... balanced their half years on March 31 and would now be starting to look at interim dividends.

Those banks will now either not pay dividends, or reduce current payout levels and try and encourage shareholders to take up the DRPs.

Macquarie Group balanced its 2019-20 financial year on March 31 as well and would fall into the same target group, while the Commonwealth doesn’t escape even though its 2019-20 financial year doesn’t balance until June 30 with the final dividend set in August.

Bendigo and Adelaide is a regional bank in a similar position, while Bank of Queensland, Suncorp (with Metway Bank), and insurers such as QBE, IAG and Suncorp’s brands are all in a similar target group to the bigger financial groups.

In a letter to ADIs, general insurers, life companies, and private health insurers, APRA outlined its expectations that these institutions limit discretionary capital distributions in the months ahead, including deferrals or prudent reductions in dividends.

APRA said in its letter that because banks and other financial groups play an important part in the economy, it “expects ADIs and insurers to limit discretionary capital distributions in the months ahead, to ensure that they instead use buffers and maintain capacity to continue to lend and underwrite insurance.”

“This includes prudent reductions in dividends, taking into account the uncertain outlook for the operating environment and the need to preserve capacity to prioritise these critical activities.”

“Decisions on capital management need to be forward-looking, and in the current environment of significant uncertainty in the outlook, this can be very challenging. APRA is therefore providing Boards with the following additional guidance.

“During at least the next couple of months, APRA expects that all ADIs and insurers will:
- take a forward-looking view on the need to conserve capital and use capacity to support the economy;
- use stress testing to inform these views, and give due consideration to plausible downside scenarios (periodically refreshed and updated as conditions evolve); and
-initiate prudent capital management actions in response, on a pre-emptive basis, to ensure they maintain the confidence and capacity to continue to lend and support their customers.

During this period, APRA expects that ADIs and insurers will seriously consider deferring decisions on the appropriate level of dividends until the outlook is clearer.

However, where a Board is confident that they are able to approve a dividend before this, on the basis of robust stress testing results that have been discussed with APRA, this should nevertheless be at a materially reduced level. Dividend payments should be offset to the extent possible through the use of dividend reinvestment plans and other capital management initiatives.

APRA also expects that Boards will appropriately limit executive cash bonuses, mindful of the current challenging environment.

https://www.sharecafe.com.au/2020/04/08/apr...s-to-dividends/



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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: Apr 2 2020, 09:24 AM
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https://www.afr.com/companies/financial-ser...20200402-p54g9p

The Reserve Bank of New Zealand ordered Australia's big four banks, which dominate the banking sector there, to stop paying dividends back to their parent banks in Australia, to build up more earnings to protect its economy from the COVID-19 crisis.

The move by New Zealand regulators, which have taken a hard line on the Australian owned banks, follows similar moves by regulators overseas to restrict distributions to shareholders to ensure banks are strong enough to withstand growing losses as businesses shut down due to the coronavirus struggle to repay debts.

================================================

thumbdown.gif where we living???????????



 
nipper
post Posted: Mar 23 2020, 07:41 PM
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QUOTE
.....balance sheets of the banks are viewed as better positioned than before the global financial crisis.

"Clearly the banks are not immune to what's going on. They're at the epicentre of the current crisis due to the critical role they play in the economy," said portfolio manager Brett McNeill. "We don't know where earnings will land and by extension dividends, although our base case is that both will be cut but we don't know the extent just yet."

He said more would be known when three of the big four banks – which account for four of Djerriwarrh's six biggest holdings – report in May, though "a lot has to play out between now and then".

The big four banks and Macquarie Group were better able to withstand the current pressures on their balance sheets than past crises.

"Banks are in a much better position in terms of their capital and their liquidity versus heading into the GFC," Mr McNeill said. "We think this will limit to some extent the downturn in the banks, but it remains a very challenging sector."
Brett McNeill of Djerriwarrh



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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: Mar 14 2020, 05:52 PM
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In Reply To: early birds's post @ Mar 14 2020, 04:56 PM

Spot on, eb, well done. I understand margin calls happen at 11am for some; this could help

But, and I look at these things daily, by the minute (miss my live Iress stream now I'm pulling back), each day is different.

Traders' rules while volatility persists.



--------------------
"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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joules mm1
post Posted: Mar 14 2020, 05:36 PM
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In Reply To: early birds's post @ Mar 14 2020, 04:56 PM

kudos, Eb





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. . . . . . . . everything has an art.....in the instance of the auction process, the only thing, needed to be listened to; price

Said 'Thanks' for this post: early birds  
 
early birds
post Posted: Mar 14 2020, 04:56 PM
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In Reply To: nipper's post @ Mar 14 2020, 02:08 PM

i know everything you bought in the morning all had huge turning around with the big arvo rally

but for our major 4 banks to be down around 12% in the morning and finished day up over 1%............that gonna be writing in the history books for our stock market i reckon. smile.gif

glad i did heavy buying in the morning. it's not just luck about timing, i did see "forced selling" happened and take the action.

i deserve a pat at my back as i did calling hear. ohmy.gif


Said 'Thanks' for this post: nipper  
 
nipper
post Posted: Mar 14 2020, 02:08 PM
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QUOTE
The four big banks have slashed the interest rates they pay to savers, protecting their margins but dealing a triple blow to some, with bank share prices battered and dividend cuts possible as bad debts spike in response to the coronavirus.

Major bank shares came back from the [slum in a late rally on Friday as the market rebounded and the Reserve Bank increased the size of its open market operations to support bank liquidity after credit markets seized up on Thursday night.

But the surge into the Friday close came after a horror three weeks; major bank stocks are down by around 30 per cent since their late February highs as analysts expect the number of impaired loans will rise as the coronavirus slows GDP growth and unemployment goes higher.


One bit of info I'm noticing: quite a few of the 'spurts are talking about the merits of cash. Even held in zero-interest accounts. Useful to have around when equity markets fall 30%, credit markets seize and bonds lose 10%.

Stuff like
QUOTE
"I always like cash, and everyone should have 10–20% cash in their portfolio at all times. The good thing about cash here is that, with interest rates at such low levels—perhaps even negative—the opportunity cost of holding cash is low.

Kinda dumb to hold cash when interest rates are 8%. Makes more sense when rates are at 1%".




--------------------
"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: Mar 13 2020, 02:05 PM
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In Reply To: nipper's post @ Mar 13 2020, 01:30 PM

look at banks price now nipper

you can imagine EB doing the chest beating like animal lmaosmiley.gif

seems i did good buying . paid off !



 
 


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