Lifting loan rates won’t help banks

11 Comments

1. 

   Batto
   October 30, 2015 at 9:55 pm:

   In your article you ssy’Kansas could be a long way down ‘ what is the Kansas reference

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     Roger Montgomery
     November 1, 2015 at 9:06 pm:

     Hi Botto. here you go: https://www.youtube.com/watch?v=vQLNS3HWfCM

2. 

   idor
   October 29, 2015 at 9:52 pm:

   Banks are not indispensible…..they are a business like all businesses and the risk is could the net profit go down ?at least for a year or several? I own 3 and will reduce when i get my price….from 30% in banks to 15 -20 %

3. 

   Andrew Wright
   October 28, 2015 at 11:17 am:

   Yes, but it’ll be interesting to see if banks plunging prices will last. Lots of baby boomers retiring all at once searching for yield stocks? The banks are still pretty solid stocks, perhaps even more so now and in somewhat of a monopolistic position. This will translate into upward pressure on price. I agree with you that their near to medium term earning outlook looks grim, but the good times will roll again – its in the demographics. In the next 10 year our population will grow to 25 to 26 million souls

   • 

     Roger Montgomery
     October 30, 2015 at 3:38 pm:

     This is cyclical Andrew. In 35 years time the population of Australia could be double. The banks, one suspects can be earning a lot more but more people also means more volatility too.

   • 

     Angelo
     October 30, 2015 at 4:12 pm:

     Most people aren’t pricing in the possibility that the banks can go to zero. They probably won’t but if there is a real property bubble bursting event (property prices drop 30 – 50+%) they will probably go bust and need the government to bail them out like we saw happen overseas. Even if it’s a less than 50% risk, it’s not a tiny risk. I wouldn’t touch any Australian banks with a barge pole.

4. 

   Warren
   October 27, 2015 at 5:55 pm:

   Making the banks “unquestionably strong” also makes them more attractive. How many businesses can be described this way? Also, housing is not a usual product where price is completely dictated by demand/supply. There are other variables such as dirty money being washed through our property market from other countries and from within. The demise of house prices and bank share prices is too early to call, especially as banks can always morph by buying other complementary businesses and use technology to reduce costs and provide better services.

5. 

   Andrew Wright
   October 27, 2015 at 4:03 pm:

   A very prescient piece of writing on the likely direction on property prices in the near future. I’m sure bank stocks will be impacted too, but there just seems so much pent up demand for ‘yield’ stocks that I cannot see bank stocks falling dramatically.

   • 

     Roger Montgomery
     October 28, 2015 at 10:49 am:

     Westpac’s last capital rising was at a 37 per cent discount to the high for the year. That’s usually defined as a crash Andrew!

6. 

   Angelo
   October 27, 2015 at 11:31 am:

   Hi Roger,

   Interesting article, thanks.

   What does the graph represent? Percentage change in loan rates?

   • 

     Roger Montgomery
     October 28, 2015 at 10:49 am:

     The editors saw fit to include a share price change graph.