Any ideas on when the CBA will go Ex div for the second dividend installment this year?
Steve
Stevie, we also have an infraction system and if you pad out posts to make 100 characters you score a 2 pointer!! Keep it in mind.thanks Cuttlefish. much appreciated. Wow I see what you mean re 100 characters. I have not struck that before on a forum.
Stevie, we also have an infraction system and if you pad out posts to make 100 characters you score a 2 pointer!! Keep it in mind.
CBA has played by the rules so far, an ABC correction may play out before it continues upwards again.
Just my amateur
(click to enlarge)
Sigh... alright man. Be sure to come back in 6 months time and let me know how your bank stock portfolio goes.
Interesting to read about the $700m+ they are raising via the PERLS V issue announced today.
Raising capital, cutting dividends - is CBA on the acquisition trail again, despite barely bedding down BankWest?
Eric Johnston
August 12, 2009 - 2:35PM
While the headlines of Commonwealth Bank of Australia’s annual result look strong in the face of toughest banking market for nearly two decades, it is the quality that counts.
A cash profit of $4.42 billion for the year to end June comes in slightly ahead of consensus expectations of $4.28 billion but falls within the top end of an analyst range.
The annual result was down 7 per cent on the year mainly on the back of rising bad debts, but the earnings drop was cushioned by a $612 million one-off gain from the deeply discounted acquisition of BankWest late last year.
At the same time a further boost from earnings came from an effective tax rate of 25.8 per cent. This was unusually low given hefty investment allowance deductions and more income coming from low tax jurisdictions. Elsewhere, second half momentum ranging from retail banking to institutional appeared to stall.
As expected CommBank slashed its dividend by 25 per cent, falling into line with a move by its other big bank rivals. The final dividend of $1.15 takes CBA’s total dividend yield of 5.2 per cent.
BankWest bonanza
For CommBank chief executive Ralph Norris, BankWest has provided nothing but upside. Not only did CommBank actually write up the value of the deeply discounted $2.1 billion buy, it has upgraded expected synergy from the deal by $30 million.
At the same time CommBank reveals it secured a discount by as much as $367 million on the BankWest purchase price following a long running negotiations with UK lender Lloyds TSB. However, this was tipped into BankWest’s balance sheet, which was the focus of the dispute.
CommBank, which is the only major bank with an end-June balance date, provides an important barometer into the health of the sector. Rivals such as Westpac and National Australia Bank start handing down their results from late October.
The bad debt expense of $2.935 billion represents 0.72 per cent of average loans to acceptances, which is higher than analyst expectations.
While this is well up from 0.26 per cent this time last year, this figure is down from a peak of 0.81 per cent in the December half, suggesting the big corporate losses may have washed through the system.
Interestingly, CBA’s rate of arrears on housing loans is yet to show signs of a drop, particularly with arrears in Western Australia and Queensland staging a late surge. Smaller lender Bendigo Bank this week said arrears on mortgages were starting to trend down.
CommBank’s revenue growth of 14 per cent picks up pace over last year’s 10 per cent while it has improved its performance on cost growth which came in at 4 per cent compared to last year’s 9 per cent.
This so-called widening jaw helped CommBank’s cost-to-efficiency ratio, which dropped to 44.6 per cent from 48.9 per cent.
Cost claw-back
As a positive to investors, CommBank managed to claw back soaring costs of wholesale funding as it pushed through out-of-cycle interest rate rises. This helped to fatten net interest margins by 9 basis points and keeping them above the crucial 2 per cent mark.
However, pressure remains, with margins softening slightly in the second half. This is something the bank is looking to reverse.
To be sure, CommBank’s message to customers on future interest rises is blunt: "I don’t think there’s any doubt we will reprice where necessary," Norris says.
BankWest provided its first full six month contribution, adding $113 million to cash profit after tax. Stripping out this impact, CommBank’s cash profit of $4.3 billion would have been down 9 per cent.
CommBank provides its trademark caution in terms of the outlook, noting while there are signs of the beginnings of an economic recovery, particularly in Australia, there is still a degree of uncertainty and "significant risks on the down side" with unemployment expected to rise.
Also, the bank predicts a cooling of housing market. This could be a significant headwind for Commbank which is the nation’s biggest mortgage bank.
However with signs the worst of the market dislocated and large corporate losses behind it, CommBank’s shares surged 2.2 per cent in early trade, and maintained the gains into mid-afternoon. The latest rally comes on top of gains of almost 10 per cent over the last two weeks, a rise of more than 80 per cent from its January lows.
Elsewhere, CommBank taps its hybrid capacity to raise an additional $700 million(bank regulators prefer to keep this form of capital limited to 25 per cent of total capital).
This is the first large hybrid issue of the year, suggesting signs of life could be returning to the market which has remained stalled since September.
This issue will help pump-up CommBank’s tier one ratio from its current level of 8.07 per cent to around 8.31 per cent, which is more in line with its major rivals.
As an aside, Norris pours water on some suggestions he was planning to retire, but following a string of mishaps over the past year ranging from the bank’s disastrous involvement with aggressive financial planner Storm Financial; breakdowns in internet banking; to being exposed to highly-leveraged companies such as ABC Learning; Norris chose to break the bank's long-standing policy of a black-out on pre-profit briefings to go on a public relations offensive.
But after already being caught out soft-sounding investors on last year’s $2 billion capital raising, his latest effort probably won’t win over the hearts and minds of regulators.
ejohnston@theage.com.au
Interesting to read about the $700m+ they are raising via the PERLS V issue announced today.
The prospectus lists a lot of cons. Have a read of it.
I had a look at the history of PERLS III and IV. Appears they have traded some periods below their face values. Would I be correct to assume that is mostly related to the lower interest margin? So their price is much tied to interest rates.
PERLS V seems to have a better interest margin so that is likely to trade at better prices compared to III and IV?
We use cookies and similar technologies for the following purposes:
Do you accept cookies and these technologies?
We use cookies and similar technologies for the following purposes:
Do you accept cookies and these technologies?