Does this leave the Big Four exposed to just one incredibly important asset class? Well at least two of the Big Four might lose some sleep over it at night. Commonwealth Bank has 65% of its loan book tied up in household mortgages, according to Eric Johnston in the Age.
April 12th, 2010 | Dan Denning | 85 comments | ContinuedAll Posts Tagged With: "commonwealth bank"
Property and the Big Four Australian Banks
There is an increasing amount of focus on the Australian residential property market. Last week, outgoing BHP Chairman Don Argus said: ‘I think the Australian Banking Sector has gone too far. You can look at some of them now as giant building societies.’ He was referring to the large exposure that the big four Australian banks have to residential property.
April 7th, 2010 | Greg Canavan | 42 comments | Continued
A Loss is Not a Loss if You Turn Debt into Equity
The yoke of debt may have felt light until now. But the lash of higher rates on the back will definitely be noticeable. Let’s just hope it doesn’t break the financial back of a whole generation of home buyers, although this is what we fear “bringing forward demand” will do.
March 24th, 2010 | Dan Denning | 15 comments | Continued
Reality Sovereign Debt Finance Theatre
The European monetary family is in crisis. It meets on March 25th and 26th to discuss whether to kick Greece off the island (survivor style) or to intervene and save the prodigal son. The problem, from a German perspective, is that Europe is full of prodigal children. To save Greece means to save the rest of the economies troubled by rising public debt-to-GDP ratios.
March 19th, 2010 | Dan Denning | 1 comment | Continued
China Using Holdings of U.S. Treasury Bonds as Cudgel to Bludgeon United States
Figures in the People’s Liberation Army want the financiers to sell U.S. bonds as a way of punishing Washington for selling arms to Taiwan. Mind you this might not seem like such a good idea if the bond selling triggers a run on the dollar and swift devaluation in China’s forex reserves. But maybe China’s arsenal of U.S. bonds is a like a pile of bullets – they’re no good unless you fire them.
February 11th, 2010 | Dan Denning | 26 comments | Continued
Bond Scam Perpetrated by Money-grubbing Government
So how does a government fund its spending programs if global creditors begin to turn to other assets? Well, it can have its own central bank “monetise the debt.” But having the central bank buy government bonds with new money is a sure-fire path to currency depreciation and higher interest rates.
November 23rd, 2009 | Dan Denning | 2 comments | Continued
Buying and Holding a Bad Strategy if Bank Earnings Remain Unpredictable
If we’re right, households have just begun reducing their debt loads. It will take years for the leverage in the system to be wound down. See Bill’s comments about that below. If you’re buying bank stocks you’re assuming credit and debt growth will resume once this recession is over. That’s a big assumption. And probably stupid.
August 12th, 2009 | Dan Denning | 4 comments | Continued
The Cash Flows Are Coming
National governments are demanding a larger portion of global savings. Government welfare transfer schemes and bailouts have to be funded from borrowing (unless from money printing), which also makes capital harder for private companies to get. Corporate cash flows will revert to the mean in the absence of huge infusions of credit to finance the growth of the balance sheet.
August 10th, 2009 | Dan Denning | 13 comments | Continued
The Trouble With Banks
Meanwhile, there is not much we can tell you that you don’t already know about the global rout in stocks. Wall Street is at twelve- year lows. The FTSE is at six-year lows. And here in Australia the market has opened lower than its five-year low, as you’d expect after such a wretched overnight performance on global markets.
March 3rd, 2009 | Dan Denning | 6 comments | Continued
Commonwealth Bank (ASX: CBA) Nearly Doubles Bad Debts Over Last Year
Should you be annoyed or relieved that the Commonwealth Bank (ASX:CBA) reported a cash profit increase of 5% yesterday morning? It would be a refreshing result in an otherwise gloomy reporting period for Aussie financials. But the news might not actually be as good as it first looks.
August 14th, 2008 | Dan Denning | 4 comments | Continued
Commonwealth Bank Profits Hit By Credit Crunch
It’s a dour day for the Commonwealth Bank of Australia. One of Australia’s four big banks, Commonwealth Bank (ASX: CBA) reported the slowest profit growth in three years today. Net income was up a modest 8% to A$2.37 billion. No one will have much sympathy for Commonwealth Bank. It raised interest rates on variable home loans by 30 basis points after the Reserve Bank’s last quarter point rise.
February 13th, 2008 | Dan Denning | 4 comments | Continued
