Financial Services
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Banks and property investors should brace for increased capital requirements
Stuart Jackson
March 31, 2017
One of the drivers behind the recent bank rally has been a perception we are over the worst of the risks around increasing regulatory capital requirements. But are we? A report card from the Basel Committee on Banking Supervision indicates this view might be a little premature. If so, there could be ramifications for banks and property investors alike. continue…
by Stuart Jackson Posted in Editor's Pick, Financial Services.
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Trump delivers more bank dividends
Roger Montgomery
February 11, 2017
If Trump is crafting a name for himself for anything beyond that for which his reputation already precedes him, it is the complete rejection of dogma. He is literally turning established orthodoxy on its head and it looks like a letter written just over a week ago by U.S. Congressman Patrick McHenry, who serves on the House Financial Services Committee, to Fed Chair Janet Yellen may even turn Australian banks on their heads, emptying them of all their franking credits and returning much more capital back to shareholders. continue…
by Roger Montgomery Posted in Financial Services.
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Second-level thinking on Australian banks
Roger Montgomery
February 2, 2017
In September 2015, Howard Marks wrote a memo entitled, ‘It’s Not Easy’, a reflection on Charlie Munger’s famous aphorism about investing, “It’s not supposed to be easy. Anyone who finds it easy is stupid.” The memo reflected upon the requirement for second level thinking in order to be a successful investor. continue…
by Roger Montgomery Posted in Editor's Pick, Financial Services.
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Warning: there might be bank pain ahead
Roger Montgomery
January 20, 2017
Since early November 2016, owners of Australian bank shares have been heartened to see stock prices rise sharply. But this could be as good as it gets – at least for a while – and it may be time for shareholders to take some profits and seek out opportunities in over-sold small and midcap companies. continue…
by Roger Montgomery Posted in Companies, Editor's Pick, Financial Services.
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4 key issues for bank shares in 2017
Stuart Jackson
January 18, 2017
The outlook for Australia’s banks in 2017 is now tougher given the rerating of the stocks the last quarter of 2016. The expectations built into share prices have clearly lifted in 2017. The big change we expect is a slowing of loan book growth. If interest rates have bottomed, affordability of debt will suffer. Market expectations imply a continuation of the growth rates we’ve seen over the past decade or two, but if the cost of debt stops falling this could act as a drag on loan book growth and the broader economy. Funding costs continue to rise, pressuring net interest margins. Slowing loan book growth is also likely to increase competitive pressure as banks look to gain market share as an offset.
by Stuart Jackson Posted in Editor's Pick, Financial Services.
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Banks are about to be hit by falling loan book growth
Stuart Jackson
December 14, 2016
As we have noted before, the outlook for loan book growth is one of the main factors that drive the prospects for bank earnings growth. The issue for the banks – and investors in the sector – is that rates are more likely to rise in the medium to longer term, and this will put downward pressure on loan book growth.
continue…by Stuart Jackson Posted in Financial Services.
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Bank reporting season highlights costs and slowing revenue growth
Stuart Jackson
November 14, 2016
Over the last week, ANZ, NAB and Westpac reported their full year 2016 results, while CBA provided a trading update for the September quarter. So I thought it would be a good time to review the key themes to emerge.
by Stuart Jackson Posted in Editor's Pick, Financial Services.
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Can the banks maintain their dividends?
Stuart Jackson
October 6, 2016
Back in May, when ANZ cut its dividend and flagged a lower dividend payout ratio, it was a strong signal that bank investors should not count on an unending stream of rising dividends. As dividend payments is a topic close to most retail investors’ hearts I thought it would be timely to take a closer look at what the future holds. continue…
by Stuart Jackson Posted in Financial Services.
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Is Deutsche Bank about to bring on a fresh financial crisis?
David Buckland
September 30, 2016
According to the IMF, “Among the globally systemically important banks, Deutsche Bank (DB) appears to be the most important net contributor to systemic risk”. So the news engulfing Deutsche Bank is a big concern for global markets – or at least it should be. continue…
by David Buckland Posted in Financial Services, Global markets.
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Falling loan book growth is a warning signal for bank investors
Stuart Jackson
September 21, 2016
Our big banks are a core holding in most Australian portfolios. But with long-term loan book growth likely to be materially lower in coming years, bank profits – and share prices – could be adversely impacted. continue…
by Stuart Jackson Posted in Financial Services.
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