Anyone buying banks yet?

[Sharkman]

as for buying more of the banks, i'll probably be applying for the full allotment in the WBC capital raising, it's almost like a free call option at 25.32

not sure i even want to go for the rights issue anymore after today's news. it's not even a 2% discount at current prices (though my understanding is that there's a 2% floor, so the "strike price" will probably be lowered the way things are going). think i'll steer clear for now, unless things over-correct and they really get hammered down to GFC type bargain levels. just not worth the risk with the constant possibility of more skeletons in the closet being uncovered, in addition to the limited growth prospects.

 

[BlindSquirrel]

I sold my NAB position the other day, was waiting for a bounce after the ex div selloff but it didn't come so I got out with a small capital gain & dividend. It's now below my initial buy in.

 

[Smurf1976]

Looking at the banks and comparing yesterday's closing price with the 2019 high:

ANZ: -14.5%

CBA: - 2.7%

NAB: -12.7%

WBC: -17.4%

Of the big 4 the most obvious point there is that all except CBA are much the same. Westpac has all the drama going on right now but looking at the share price well ANZ and NAB aren't much different whereas CBA most certainly is. Does the market know or suspect something the rest of us aren't aware of with ANZ and NAB? Of the Big 4 it seesm that the only one the market isn't worried about is CBA.

And for a couple of random smaller ones:

BOQ: -28%

MYS: -2.5%

And what about BOQ? From an investment perspective they're making Westpac look good.

The comparatively tiny MYS is perhaps explainable as a logical beneficiary of consumer dissatisfaction with the Big 4 and being a not impossible but fairly unlikely choice of financial institution for anyone engaging in dodgy dealings.

I don't hold any of them (well, my super fund probably does hold all the big 4 but I don't hold any of them directly), just thought it was interesting to see that WBC isn't doing drastically worse than two of the other big 4 and that BOQ is doing worse than any of them.

 

[BlindSquirrel]

BEN is also down 13% from the 2019 high in June, so it's par for the course.

I'm tempted to look further at banks because of the dividend yield but with that being cut and smaller banks chipping away at the customer base, I can't see the long-term moat that there used to be (like there was in 2008/9).

 

[Toyota Lexcen]

Maybe investors feel the board and management at CBA is a cut above the rest.

The banks are just being torn apart by Governments. The Banking Tax was the start of it all, which will increase next year probably.

Shareholders are having to foot the bill for financial stability here in Aus and the big4 are about to foot the bill for financial stability in NZ shortly (early Dec)

Why would you invest in them? The companies are doing very well considering the attack.

 

[frugal.rock]

Yes, I bought BOQ yesterday for 8.17

An institutional investor jumped in today after the 4pm end of 7.84 looking to pickup around 7 or 800,000 shares. A nice vote of confidence, IMO.
Final close of 7.98 meant a retrace of ~3% up on yesterday's close.
Was it just me, or were things jumpy as today?
F.Rock

 

[frugal.rock]

Yes, I bought BOQ yesterday for 8.17

An institutional investor jumped in today after the 4pm end of 7.84 looking to pickup around 7 or 800,000 shares. A nice vote of confidence, IMO.
Final close of 7.98 meant a retrace of ~3% up on yesterday's close.
Was it just me, or were things jumpy as today?
F.Rock

 

[PZ99]

The big BEN just got smaller...

Bendigo and Adelaide Bank has kicked off a $300 million capital raising as it reported a sharp profit drop and announced it was cutting its interim dividend.

Chief executive Marnie Baker blamed low interest rates and rising regulatory pressure at the release of its half-year results on Monday, adding that ongoing technology investment and compliance costs were also impacting the lender.

The bank's statutory net profit was down 28.2 per cent to $145.8 million and the company has trimmed its interim dividend from 35¢ to 31¢. The company also reported a two per cent drop in cash earnings.

> https://www.smh.com.au/business/ban...l-raise-reduces-dividend-20200217-p541eb.html

Once this dust settles I can add this to my BOQ and WBC holdings who have both capped up

 

[sptrawler]

Unless Australia rewrites its monetary system, I really can't see the Banks not coming back, time will tell but I am certainly not worried at this time.
I do hold.

 

[Dona Ferentes]

Bit of a thought bubble floated in the AFR:

If, as Justice John Middleton implied in the TPG case, three strong competitors might actually be better than four, then how might that apply to say, banking? More specifically, would the combination of Bendigo and Adelaide Bank and Bank of Queensland make a more formidable rival for the big four than the two banks do as separate entities?

The Australian Competition and Consumer Commission might not love the idea, but Bendigo’s results on Monday suggest that scale would be helpful in meeting the technology investments requirements in this sector, and getting expenses down more broadly.

Obviously this deal has long been talked about. And perhaps BOQ’s new chief executive, George Frazis, will be keen to tread his own path. But as Bendigo’s $300 million capital raising on Monday makes clear, the need for reinvestment is high now, and likely to remain elevated.

 

[sptrawler]

Bit of a thought bubble floated in the AFR:

Either that or allow the big four to swallow them up, the problem with Australia, there is only 25 million people.

 

[frugal.rock]

With the current market either buying into gold or selling gold and related entities, can't see bank's as a goer yet. So probably a good time to be buying in?
I dumped boq for a loss a while ago.
F.Rock

 

[Dona Ferentes]

Either that or allow the big four to swallow them up...

need a GFC event to let that happen. Four pillars and all that.

Faced with an inability to meet obligations, St George, BankWest, BoAdelaide all elected to 'merge' with big brothers, last crisis. It's the only time the regulator slacks off a bit.

 

[frugal.rock]

Wouldn't Bankwest get support from CBA?
I had thought they were a subsidiary of CBA?
F.Rock

 

[sptrawler]

need a GFC event to let that happen. Four pillars and all that.

Faced with an inability to meet obligations, St George, BankWest, BoAdelaide all elected to 'merge' with big brothers, last crisis. It's the only time the regulator slacks off a bit.

Yes that is true, more weaker players doesn't help competition, what the ACCC fails to grasp IMO is that there is a very limited pool of customers in Australia.
So are you better having four or Five strong Banks vying for the customers, or 10 small Banks? It is a bit like the supermarkets, IMO there really is only room for two big ones, if say Aldi gets bigger one of the others will get smaller.
So IMO to force small Banks to compete, is actually causing the small Banks to struggle and IMO ultimately disappear.
It is the same with the telco's, the Court made the right decision IMO, if TPG and Vodaphone didn't merge, one or both would have left the market.
GM just highlighted, they will only take loses for so long, then it is "so long, see you later".
Just my opinion.

 

[Dona Ferentes]

Wouldn't Bankwest get support from CBA?
I had thought they were a subsidiary of CBA

Maybe you miss my irony? It would have gone broke and the Commonwealth have to honour depositors in 2008. Better to palm it to a balance sheet that could withstand shocks.

Bankwest, previously known as The Bank of Western Australia, is an Australian full-service bank based in Perth, Western Australia. It has a chequered history:

The Rural and Industries Bank of Western Australia was a savings bank from 1956, was incorporated in 1990, and then in 1994 changed its name to the Bank of Western Australia Limited, with the trading name Bankwest, in preparation for privatisation. In December 1995, the Bank of Scotland acquired the bank. BoS merged with Halifax to become HBOS, and it became a wholly owned subsidiary of HBOS plc. It was sold in October 2008 to the CBA for A$2.1 billion and operates as a division of its parent company.

 

[frugal.rock]

Maybe you miss my irony?

I did.
Irony received, with thanks.
F.Rock

 

[CBerg]

Maybe they should loosen the capital requirements of smaller banks significantly which might encourage the smaller banks to lend more, chase more of the big 4's customers. When I look at interest rates for investor loans at the moment, all the tiny non-bank lenders provide way cheaper rates with similar functionality.

People forget Macquarie is a monstrous outfit, might not be a big 4 but it provides really good products from what I can tell, especially for investors.

 

[UMike]

Having the smallest of small dabs at WBC.
I like having an even number for the 30k parcel I bought.

No idea why the RBA rate drop affected them so much.

 

[basilio]

I suspect the government will be wanting the banks to give repayment moratoriums to businesses and possibly home owners affected by the bushfires (remember those ?) and corona virus.

How that impacts on profitability will be interesting. I can't see it in anyones interest to aggressively bankrupt businesses and home owners caught up in the current crises. We'll see