CBA - Commonwealth Bank of Australia

[divs4ever]

yeah i'm a bit confused by what i'm seeing too. i was looking at some 1 month 25'ish delta puts across the big banks today in considering a possible trade along those lines, and strangely CBAs were sitting 2-3 vol higher than the other 3, they were around 23 whereas NAB/WBC were about 20 and ANZ about 21.

usually it's the other way round, CBA is traditionally the lowest beta of the big 4, in "normal" times CBA typically sits around 12-13 and the other 3 hover around 14-15. not sure what's going on. do they know something we don't, or is this just an excellent opportunity to rack up some good decay for relatively low risk?

well there should be a housing market stress coming ( too soon for some ) , given the history ( and size ) of CBA one would think the Federal Government is more liable to throw the life-line to CBA quickly ( the others MIGHT be let wiggle for a while )

there is also inflation building , i am guessing NORMALLY the analysts/fund managers would see the better growth potential of the 'lesser three ' but now they prefer the bulk and defensive traits of CBA

 

[Sharkman]

well there should be a housing market stress coming ( too soon for some ) , given the history ( and size ) of CBA one would think the Federal Government is more liable to throw the life-line to CBA quickly ( the others MIGHT be let wiggle for a while )

there is also inflation building , i am guessing NORMALLY the analysts/fund managers would see the better growth potential of the 'lesser three ' but now they prefer the bulk and defensive traits of CBA

that's the thing though - i don't know whether the gov will treat CBA preferentially given its larger mortgage book or not, but if that were the case and/or if the fund managers are now preferring the defensive traits of CBA, that should reduce its perceived risk which should result in it having a lower IV than the others, not higher.

something is bidding up those vols, possibly there's a lot of downside protection being bought. i guess maybe because CBA has the largest mortgage book instos are worried it'll get hit the hardest if housing runs into trouble when rates start rising? purely a guess though, i really have no idea at the moment.

 

[divs4ever]

plenty of guessing to be had , in earlier times you could guess a government reaction , but now we have 'bail-in ' provisions and 'unquestionably strong banks ' ( will the government follow the new plan , or start throwing life-lines

and remember index funds put money in the biggest shares ( whether they are a bubble or not ) and i suspect quite a bit of super money finds it's way into ETFs

i really have no idea at the moment.

neither do i , but i have a plan for if the market ( and banks ) climb and climb and one for a major down ( and buy SOME dips if it just keeps on bouncing along )

 

[Sean K]

Not sure if this is a dead cat, or if it's found a support base. Probably at the mercy of US overnight markets at the moment.

 

[eskys]

All that excitement this morning didn't last long, one major gone red

 

[Dona Ferentes]

All that excitement this morning didn't last long, one major gone red

didn't even fill the gap

 

[eskys]

didn't even fill the gap

yeah, not enough fillers in the cracks

 

[dyna]

Wednesday, 13 th AFR :

CBA's stake in giant BNPL ( plus normal banking services in Europe ) Swedish player, KLARNA , is still in profit, with its holding worth $ US 335 Million after taking part in the recent $ US 800 Million raising. That brings KLARNA's mkt cap up to $ US 6.7 Billion, a fair bit down from the $ US 45.6 Billion valuation, a year ago.

CBA's investment in the buy-now, pay-later show, was worth a cool $ 2.3 Billion back then, too.
The bank doesn't see the next generation of customers, ever returning to its once highly profitable credit card racket.

 

[Dona Ferentes]

A fully franked final dividend of $2.10 per share has been determined for the six months to 30 June 2022.

• over the 12 months to June 30 the bank had lifted its mortgage lending by $36.4 billion or 7.4 per cent, to $528 billion.
• household deposits were up by 13.2 per cent or $40.9 billion and business deposits were up 15.1 per cent or $23.9 billion.
• CBA said 98 per cent of its home loan lending was to customers with CBA transaction accounts, helping it to monitor risk.
• Business lending grew by more than housing; it was up 13.6 per cent or $15.4 billion, to $180 billion.
• Common equity tier 1 (CET1) capital was 11.5 per cent, stronger than its level before COVID-19.
• Bad debts remain low, home loans more than 90 days overdue fell to just 0.49 per cent of all loans, down from 0.64 per cent a year ago. Credit card arrears also fell.
• net interest margin, the key driver of a bank’s revenue, was 1.9 per cent, down 0.18 percentage points over the year

 

[Dona Ferentes]

Of course, there's the impairment for the Klarna folly; CBA has now written down the value of its stake in Swedish buy now, pay later group from $2.7 billion on June 30, 2021 to $408 million as at 30 June, 2022.

.... the huge write-down was driven by changes in private equity valuations over the year and revenue multiple adjustments lower.

 

[gartley]

One of the first ones I bought when the rally was starting but now have exited this position as most likely this will re test lows. Price met price projection and is now a sell for me.

 

[Sharkman]

i'm not so sure the rally is done just yet, 30 day EMA looks like it's about to cross over the 180 day, maybe it's not quite out of puff just yet. i did sell the sep 100.01 (european style) covered calls the other day anyway, as it's basically like collecting a second dividend, and the collateral can always be recycled into stripping the div of one of the other 3 in nov if it gets assigned. i'll still regret it if it ends up hitting those 108 peaks as it's done a few times over the past year, but with vols hovering in the low 20s (significantly elevated vs CBA's historical tendency) i thought it was worth the risk

 

[mullokintyre]

Given the size of the CBA in the Oz financial scene, I am more than a little surprised that there is not a flurry of comments about the CBA.
I have not traded or held CBA for some time, its just not one of my things.
The CBA, like most of the banks, took a little skin in the bruising Royal Commission, and one would hope they had learnt their lesson.
However, i am not sure , firstly when dealing my fathers estate over the past year or so, and now with an intriguing potential court case.
From the evil Murdoch press

Commonwealth Bank faces the threat of a new class action, this time against its share trading arm CommSec, as wealthy businessman Alistair Paton ramps up complaints including accusations of falsifying records and withholding information.
Mr Paton – a former Deutsche Bank employee and hospitality and property entrepreneur – told The Australian he was not backing down in his fight against CBA. His matter is currently being examined in detail by the Australian Financial Complaints Authority.

“It (CBA’s conduct) goes against all of the things they committed to after the banking royal commission, and with the CommSec overcharging case it seems like all of that happened at once,” he said.
“Most of (CommSec’s) customers are small customers, mums and dads, and when the bank throws the terms and conditions at them they accept it. They didn’t bank on the fact that I was not going to back down.”

Mr Paton’s matter against CBA goes back to a sudden suspension of his trading account late last year when the bank claimed he had not informed it of a change of directorship at his family trust.

The decision came without warning and led to hundreds of thousands of dollars in losses, given he was unable to trade in stocks, including Magellan Financial, Titan Minerals, Greenstone Resources and AMP.

The events set in motion a damaging chain of events that Mr Paton said shone a light on the inadequacy of CommSec’s systems and processes, and led to swelling losses and his claim of almost $2m against the bank, including interest.

The saga included a CBA customer relations manager telling Mr Paton he would investigate his file over a weekend while “drinking a bottle of scotch”.

Mr Paton has since conducted his own probe and discovered emails from 2018 showing the bank was aware of a change in directors, meaning in his view the account should not have been suspended. Documents sighted by The Australian show CBA had argued it was entitled to suspend the trading under the terms and conditions of its CommSec accounts.

A CommSec spokesman said: “The allegations have been thoroughly investigated and the parties are currently engaged in a confidential dispute resolution process in relation to this matter. We cannot comment on the matter any further.”
Among the transactions in question is a December trade of $227,500 for 250,000 AMP shares at 91c that was placed by Mr Paton at 1.29pm and then executed by the bank at 3.39pm, after the account was suspended at about 1.53pm.

At first, the bank said the trade was executed by Mr Paton and produced a computer-generated order ticket stating it was executed at 1.29pm. Mr Paton, using ASX records, showed that was not possible, which led the bank to withdraw that argument.

CBA admitted in a letter to AFCA in February that it had incorrectly told the agency an AMP order had been executed at 1.29pm on the day of the account’s suspension, when the order had only been placed. It has described the admission as a mistake.

To track down his orders and an exact audit of the CommSec account, Mr Paton had to obtain the information from outside the bank. “They withheld that information and then we obtained it from Iress without them knowing,” he said.

It remains to be seen whether anything will come of this, but the bank may yet regret fobbing off this particular plaintiff as he seems to have some sizeable funds at his disposable.
Its one thing to rip off the mum and dads, but woe betide the bank that tries to rip off the well to do.
Mick

 

[rcw1]

Good afternoon
CBA on steroids. Never witnessed the SP so high ever... Well done to those holding.

Not holding ha ha ha ha ha
Edit: haven't held for over 12 months.

Have a very nice weekend.

Kind regards
rcw1

 

[Sharkman]

getting very tempted by something like a 108-100 jan '23 bear put spread the last couple of days. good delta skew there, buy the 108s at 16 IV, sell the 100s at 20 IV, about $1.50 at the mids = <20% the distance between the strikes. i probably won't end up doing one, as i swore off long gamma plays a while ago, don't think i've made one for over a year now. but it is rather tempting seeing that it's bounced off resistance at the sort of level it's at now quite a few times recently.

i have a smallish long stock position in my long term buy & hold portfolio. every 6 months i try to do a sell puts - take delivery - strip div - sell covered calls - get called away sequence in my options trading portfolio, but sometimes things don't line up and i don't end up doing it, or i sell the puts and they don't get assigned, in which case i just pocket the premium and move on. no position in the options trading portfolio at the moment.

 

[rcw1]

Good afternoon

The Federal Court has struck out charges against Commonwealth Bank alleging it had wrongly charged customers $55m over nine years for account access fees. The Australian Securities and Investments Commission had lobbed the court claims at CBA, claiming the bank charged customers fees to access their accounts despite representing to customers' those fees would be waived.

However, the Federal Court found in favour of CBA, finding CBA's terms and conditions, that customers should check to see if there were errors in statements was sufficient. The court found CBA did not represent that it would have adequate systems in place to ensure fees would be waived. Rather, CBA was found to have told customers that the bank “can get things wrong, and when this happens” the bank is “determined to make them right again”.

The court found CBA did not breach its general obligations and did not breach its financial services licence.
ASIC deputy chair Sarah Court said the regulator would consider the judgement "and continue to work to ensure large financial institutions charge fees correctly and put their customers first".

 

[Dona Ferentes]

CBA has moved above $110 a share ... only the second time it has been there. Oct 2021 was the last.

There is analyst talk that the earnings and likely dividend could be revised up, when the bank reports next month.

 

[Porper]

CBA has moved above $110 a share ... only the second time it has been there. Oct 2021 was the last.

There is analyst talk that the earnings and likely dividend could be revised up, when the bank reports next month.

Brokers have been bearish on CBA for many months now...yet they don't have a bad word to say about the other big 3. Technically it's the leader i.m.o. It has been for a decade at least. I don't hold.

 

[Dona Ferentes]

Brokers have been bearish on CBA for many months now...yet they don't have a bad word to say about the other big 3. Technically it's the leader i.m.o. It has been for a decade at least.

The institutional brokers, given they can hold billions in our larger companies, have to develop methodologies to price, and compare with other banks. It's a tricky game, and quantifying may not encompass everything, with quality much harder to pin down.

Australian banks are trading at a 7 per cent premium to long-term averages on a relative price-to-earnings basis, while banks in Britain and the US trade at discounts of between 11 per cent and 19 per cent.

CBA is something else entirely. Its forward P/E of 17.8 times, and its price-to-book ratio of 2.56 times, easily make it the world’s most expensive bank.

Myself, I'm happy to have held CBA since the float and not sold. All those capital gains if i did! The best metric I have is that for every dollar put in, I'm now receiving a sizeable proportion of that amount in dividends, each year .

CBA was partially floated on 12 September, 1991 at $5.40 a share. In 1993, the Commonwealth government sold a further 178 million shares at $9.35 for retail investors, and fully privatised the business in 1996, via a buyback offer.

 

[Dona Ferentes]

CBA reported and it would be fair to say it got sold off, not on the result but on the fear that this nay be as good as it gets.

Big numbers, and an increased dividend, CET1 at 11.5%, so what caused the 5% sell off?

Some increase in impairments (to be expected) ... but analysts pointed to its NIM, a core driver of revenue which points to the difference between interest received from customers and rates paid out to depositors. It had peaked in October and fell in November and December .

And that was enough, it seems. Still well above $100 A share