The Reserve Bank has increased interest rates...
#92
Re: The Reserve Bank has increased interest rates...
whats laughable is thinking Australian banks are completely divorced from world wide banking corp - whilst Aus is a small fish is a very big sea, it's part of the problem as well as solution
#93
Lost in BE Cyberspace
Joined: Oct 2005
Location: Hill overlooking the SE Melbourne suburbs
Posts: 16,622
Re: The Reserve Bank has increased interest rates...
Okay I can't believe I have to explain this but here goes.
I wrote "The government gave enough backing to stop the smaller banks going broke" with the footnote "obviously the Aus government couldn't stop HBOS going broke which caused the sale of Bankwest to CBA".
This was highlighted as me not being able to make up my mind. Which is just complete crap and poor comprehension. HBOS went tits up in the UK and had to be rescued by the UK government. This has completely nothing to do with the Aus government. To be clear the Aus government was not in the position to stop HBOS going tits up. Now Bankwest was a profitable subsidiary of HBOS and if Bankwest had been going broke then the Aus government could have got involved with saving Bankwest. But it didn't because Bankwest was not going broke. It was still a profitable bank and did not need rescuing. As it was a profitable subsidiary it was sold to bring money into HBOS which was a decision completely out of the control of the Aus government. Bankwest was sold to CBA very quickly. Not because it was going broke but because it was in good condition and was being sold quickly as part of a fire sale.
So back to what I said "The government gave enough backing to stop the smaller banks going broke". This is what happened. None of the smaller banks went broke.
I added the footnote about Bankwest because I could see someone a little slow in the thinking department suggesting that Bankwest went broke. So I thought I would cut that one off at the pass by putting in a footnote that Bankwest was sold at that time not because it went broke but because its UK parent went broke. Which was something completely outside of the control of the Aus government as HBOS is a British bank not an Australian bank. And although Bankwest was the Australian subsiduary of HBOS it was covered by the Australian guarantees but as it didn't go broke it didn't need the Aus government to rescue it.
I'm starting to think that comprehension tests in English shouldn't have gone multichoice
I wrote "The government gave enough backing to stop the smaller banks going broke" with the footnote "obviously the Aus government couldn't stop HBOS going broke which caused the sale of Bankwest to CBA".
This was highlighted as me not being able to make up my mind. Which is just complete crap and poor comprehension. HBOS went tits up in the UK and had to be rescued by the UK government. This has completely nothing to do with the Aus government. To be clear the Aus government was not in the position to stop HBOS going tits up. Now Bankwest was a profitable subsidiary of HBOS and if Bankwest had been going broke then the Aus government could have got involved with saving Bankwest. But it didn't because Bankwest was not going broke. It was still a profitable bank and did not need rescuing. As it was a profitable subsidiary it was sold to bring money into HBOS which was a decision completely out of the control of the Aus government. Bankwest was sold to CBA very quickly. Not because it was going broke but because it was in good condition and was being sold quickly as part of a fire sale.
So back to what I said "The government gave enough backing to stop the smaller banks going broke". This is what happened. None of the smaller banks went broke.
I added the footnote about Bankwest because I could see someone a little slow in the thinking department suggesting that Bankwest went broke. So I thought I would cut that one off at the pass by putting in a footnote that Bankwest was sold at that time not because it went broke but because its UK parent went broke. Which was something completely outside of the control of the Aus government as HBOS is a British bank not an Australian bank. And although Bankwest was the Australian subsiduary of HBOS it was covered by the Australian guarantees but as it didn't go broke it didn't need the Aus government to rescue it.
I'm starting to think that comprehension tests in English shouldn't have gone multichoice
This is a very good article summing up a lot of this.
http://www.theaustralian.com.au/news...-1225948549080
Here's the main quote:
Moreover, while the Australian banks have not been reduced to rubble, as in the US and Europe, they face the same more bracing post-crisis world.
Their balance sheet expansion and profit growth from two decades of higher household gearing is ending as the credit boom gives way to debt deleveraging. And the big miners don't need them to finance their investment boom.
The PwC analysis suggests the public does not fully appreciate this fundamental break nor the lingering global financial risks.
Instead, the legacy of a household sector heavily geared to high housing prices has made interest rate politics even more explosive. Housing interest payments now take twice the share of household disposable income than during Paul Keating's 18 per cent interest rates of the late 1980s.
And now the Reserve Bank is lifting interest rates to quarantine the huge national income boost from our sky high iron ore and coal prices. It's demanding that Australians save more of our terms of trade boom rather than spend it on, say, a day of Melbourne Cup revelry. It's enforcing an income transfer from borrowers to savers as the economy unwinds a decade or more of borrowing.
The winners from higher interest rates are retirees and savers. But no one wants the political heat from mortgage-belt losers, who may be losing further as the banks unwind their cross-subsidy from business lending. Will this heat fall on Swan for not bringing the banks or his budget deficit to heel, or for not taking the IMF's advice to jack up the GST and cut income tax to reward saving? Or will it singe Stevens, who Sydney's The Daily Telegraph famously called Australia's most useless man when he lifted rates during the pre-crisis boom? Or the banks, because they've always been bastards?
http://www.theaustralian.com.au/news...-1225948549080
Here's the main quote:
Moreover, while the Australian banks have not been reduced to rubble, as in the US and Europe, they face the same more bracing post-crisis world.
Their balance sheet expansion and profit growth from two decades of higher household gearing is ending as the credit boom gives way to debt deleveraging. And the big miners don't need them to finance their investment boom.
The PwC analysis suggests the public does not fully appreciate this fundamental break nor the lingering global financial risks.
Instead, the legacy of a household sector heavily geared to high housing prices has made interest rate politics even more explosive. Housing interest payments now take twice the share of household disposable income than during Paul Keating's 18 per cent interest rates of the late 1980s.
And now the Reserve Bank is lifting interest rates to quarantine the huge national income boost from our sky high iron ore and coal prices. It's demanding that Australians save more of our terms of trade boom rather than spend it on, say, a day of Melbourne Cup revelry. It's enforcing an income transfer from borrowers to savers as the economy unwinds a decade or more of borrowing.
The winners from higher interest rates are retirees and savers. But no one wants the political heat from mortgage-belt losers, who may be losing further as the banks unwind their cross-subsidy from business lending. Will this heat fall on Swan for not bringing the banks or his budget deficit to heel, or for not taking the IMF's advice to jack up the GST and cut income tax to reward saving? Or will it singe Stevens, who Sydney's The Daily Telegraph famously called Australia's most useless man when he lifted rates during the pre-crisis boom? Or the banks, because they've always been bastards?
#94
Account Closed
Joined: Jun 2005
Posts: 9,316
Re: The Reserve Bank has increased interest rates...
In classes we had to write an explanation. Then, in what appeared to be a sudden move, the WJEC introduced multichoice for the O'levels. Bingo! 1 grade higher, free of charge. Loved it then but didn't realise the long term consequences.
#96
Guest
Posts: n/a
Re: The Reserve Bank has increased interest rates...
I reckon the WJEC introduced for O'levels circa 1982.
In classes we had to write an explanation. Then, in what appeared to be a sudden move, the WJEC introduced multichoice for the O'levels. Bingo! 1 grade higher, free of charge. Loved it then but didn't realise the long term consequences.
In classes we had to write an explanation. Then, in what appeared to be a sudden move, the WJEC introduced multichoice for the O'levels. Bingo! 1 grade higher, free of charge. Loved it then but didn't realise the long term consequences.
#97
BE Forum Addict
Joined: Mar 2006
Location: Jeddah, Saudi Arabia
Posts: 1,717
Re: The Reserve Bank has increased interest rates...
But look on the bright side. The Aus banks didn't cause the GFC. They didn't get bailed out by the government. The government gave enough backing to stop the smaller banks going broke* thus avoiding more consolidation into the big 4 (who would have survived without government's backing and would have bought up the smaller banks as they went bust). The banks aren't pleading poverty but are highlighting that their raw materials are getting more expensive. The interest rate is now lower than it was immediately before the GFC. And all that government backing kept the Australian economy out of recession.
* obviously the Aus government couldn't stop HBOS going broke which caused the sale of Bankwest to CBA.
And who knows, but the increasing interest rates might curb the enthusiasm of people investing in the Australian housing bubble.
* obviously the Aus government couldn't stop HBOS going broke which caused the sale of Bankwest to CBA.
And who knows, but the increasing interest rates might curb the enthusiasm of people investing in the Australian housing bubble.
#98
Account Closed
Joined: Jun 2005
Posts: 9,316
Re: The Reserve Bank has increased interest rates...
Quite. I think in calmer times the competition commission would have had something to say.
#100
Re: The Reserve Bank has increased interest rates...
Several more rate rises to come according to the news, will help my savings!
#101
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Joined: Mar 2006
Location: Jeddah, Saudi Arabia
Posts: 1,717
Re: The Reserve Bank has increased interest rates...
I still think the Rudd government overreacted, they over stimulated and now we will have to pay the price. Even small interest hikes are hitting hard, they should never have increased the FHBG, they encouraged more people to take on debt at a time when deleaverging should have been the order of the day, instead they extended the housing bubble.
#102
Account Closed
Joined: Jun 2005
Posts: 9,316
Re: The Reserve Bank has increased interest rates...
I still think the Rudd government overreacted, they over stimulated and now we will have to pay the price. Even small interest hikes are hitting hard, they should never have increased the FHBG, they encouraged more people to take on debt at a time when deleaverging should have been the order of the day, instead they extended the housing bubble.
I'm just glad Aus didn't have to start printing money.
#103
Forum Regular
Joined: Jan 2010
Posts: 188
Re: The Reserve Bank has increased interest rates...
Isn't it wonderful how much people hate reality.
Nobody said they were struggling,$6 billion is still around 1% of assets.They will still operate on 2 - 2.5 % gross profit margin.They will face tougher times ahead.Interest rates will rise out of sync.People would not be able to get by without them.
The crowd will still pat each other on the back at how wise bullshit is,they will always put complaining ahead of facts,fooling themselves that it makes reality disappear.
Next year they will make around 1% net profit,the complaints will still be long and loud,reality will still be the same,just as it is every year.
You will still be moaning at how dare people point out reality,nothing much changes does it
I'll let you into a secret of wealth,all the bullshit ,all the refusal to see reality,and the only people they cheat are themselves.Funny old life innit.
G D/y
#104
Joined: Jun 2006
Posts: 4,555
Re: The Reserve Bank has increased interest rates...
CBA return on equity is only marginally below superprofits.
http://www.smh.com.au/business/cba-r...811-11z0b.html
Anything to increase competition in the sector is good for the wider economy.
http://www.smh.com.au/business/cba-r...811-11z0b.html
Anything to increase competition in the sector is good for the wider economy.
For a sleepy retail bank, CBA is delivers a whopping return on equity of 18.7 per cent (up from 15 per cent in the previous year). This outpaced flashy investment bank Macquarie Group which generates a ROE of 10 per cent, while regional lender Bendigo Bank's returns are closer to 8.3 per cent.
CBA's relatively low risk lending book and strong cash generation helping a 42 per cent jump in second half dividend to $1.70 a share, helping it maintain an average a dividend yield of more than 5.5 per cent over the past few years.
CBA's relatively low risk lending book and strong cash generation helping a 42 per cent jump in second half dividend to $1.70 a share, helping it maintain an average a dividend yield of more than 5.5 per cent over the past few years.
OH dear
Isn't it wonderful how much people hate reality.
Nobody said they were struggling,$6 billion is still around 1% of assets.They will still operate on 2 - 2.5 % gross profit margin.They will face tougher times ahead.Interest rates will rise out of sync.People would not be able to get by without them.
The crowd will still pat each other on the back at how wise bullshit is,they will always put complaining ahead of facts,fooling themselves that it makes reality disappear.
Next year they will make around 1% net profit,the complaints will still be long and loud,reality will still be the same,just as it is every year.
You will still be moaning at how dare people point out reality,nothing much changes does it
I'll let you into a secret of wealth,all the bullshit ,all the refusal to see reality,and the only people they cheat are themselves.Funny old life innit.
G D/y
Isn't it wonderful how much people hate reality.
Nobody said they were struggling,$6 billion is still around 1% of assets.They will still operate on 2 - 2.5 % gross profit margin.They will face tougher times ahead.Interest rates will rise out of sync.People would not be able to get by without them.
The crowd will still pat each other on the back at how wise bullshit is,they will always put complaining ahead of facts,fooling themselves that it makes reality disappear.
Next year they will make around 1% net profit,the complaints will still be long and loud,reality will still be the same,just as it is every year.
You will still be moaning at how dare people point out reality,nothing much changes does it
I'll let you into a secret of wealth,all the bullshit ,all the refusal to see reality,and the only people they cheat are themselves.Funny old life innit.
G D/y
#105
Guest
Posts: n/a
Re: The Reserve Bank has increased interest rates...
In 2008 CBA declared a $4.822 billion after tax annual profit and reported about 7.7 million customers. That was $626.23 per customer.
In 2009 $4.753 billion after tax annual profit ($617.27 per customer)
In 2010 $5.680 billion after tax annual profit ($737.66 per customer)
Profit according to CBA financials.
Assuming the customer based stayed the same.
In 2009 $4.753 billion after tax annual profit ($617.27 per customer)
In 2010 $5.680 billion after tax annual profit ($737.66 per customer)
Profit according to CBA financials.
Assuming the customer based stayed the same.