Category — Banks

March 29th 2012 – Australasian Investment Review – (AIR)

Shares in the Bank of Queensland relisted yesterday after the first stage of a $450 million capital raising, and contrary to previous belief, the damage to the share prices wasn’t too heavy.

The Bank told the market that it had strong support from institutions for the capital raising and will now push ahead with the retail leg of the cash call.

Shares in the regional lender opened 1.2% lower at $7.21 after coming out of a trading halt this week.

They then bounced to be up nearly 5% or 37c at $7.67 which is a strong vote of confidence from investors.

[Read more →]

March 29th 2012 – Australasian Investment Review – (AIR)

The Reserve Bank has given the Australian financial system and banks a tick of good health in its first Stability Review of 2012.

But the central bank has again cautioned banks and their investors not to expect rampant profit growth in the next year or so.

The Bank repeated a comment first carried in last week’s minutes of the March 6 board meeting, when it said:

“..the Australian banks had continued to record robust profits, although the slow credit growth environment was likely to constrain the pace of future profit growth.”

Yesterday it expanded on that saying in the first Stability Review of 2012 “the slow credit growth environment could constrain the pace of their future profit growth.

“It would therefore be unhelpful if banks were to chase unrealistic profit expectations by taking on more risk – through lowering credit standards or expanding too quickly into new or unfamiliar markets – or by pursuing cost cutting in a way that weakens their risk management capabilities.” [Read more →]

March 27th 2012 – Australasian Investment Review – (AIR)

It’s not the start of a trend, but the loss from the Bank of Queensland should worry investors.

The bank yesterday revealed a shock first half loss of $91 million (for the six months to January 28), becoming the first local bank to report a loss in a reporting period for years.

The loss was completely unexpected and was the first loss by an Australian bank in 20 years.

The bank is now looking for $450 million, with 74 million shares to be issued, a third of its existing shares on issue, a sign of how much the bank needs new capital.

The shares will be issued at $6.05, a 17% discount to the close last Friday of $7.03. BoQ shares went into a trading halt yesterday after the issue and trading update was issued. [Read more →]

A lot of people probably think we are out of the woods now that Greece is “done”. But we are in the middle of a deep dark forest.

Maybe the simplest way to describe where we are is to say that we are in the centre of a balloon, which is itself surrounded by a diminishing number of balloons. Think of a Russian nesting doll with a smaller Babushka inside each bigger Babushka. Now replace a homely Russian grandmother with balloons.

The largest balloon popped in 2007 when the US housing market crashed. Ever since then, the remaining balloons have popped too. In 2008-2009, the banking and insurance balloons popped. That was okay because inside those balloons were even more balloons: government bonds and central banks.

Since 2010, the government bond balloon has leaked air. From deeper inside that balloon, central banks have been conjuring up even more air to keep the government bond balloon from totally deflating.

February 28th 2012 – Australasian Investment Review – (AIR)

For the second time in a week a senior financial regulator has warned our banks against relaxing their lending standards on home loans.

A week ago last Friday, Dr John Laker, the head of APRA, the country’s lead bank regulator, repeated a warning on home lending he made a year ago in his first appearance of the year in the Senate Estimates hearings.

Last Thursday, the head of the Reserve Bank’s Financial Stability Department Luci Ellis reminded a mortgage conference in Sydney that lenders had to guard against reducing standards.

The two warnings have raised speculation that the regulators have spotted our banks trying to drive revenue growth by relaxing lending standards. But regulatory sources say there’s no sign of this at the moment from the banks, and that the two public comments are a form of ‘jawboning’ ahead of any problems developing. [Read more →]

I think we’re now approaching the final act of the four-year-old Global Financial Crisis.

How it will play out is anyone’s guess. But one thing’s for sure: there’s still a lot of uncertainty in this market.

And not only in shares.

The Aussie dollar is trading near all-time highs against the US dollar and the euro.

The banks are overweight on mortgage debt.

Have you stopped to ask how safe your cash is?

If you perceive a risk in the stock market, do you really think it’s any safer to put your cash in term deposits or cash management accounts in Australian banks? [Read more →]

February 16 2012 – Australasian Investment Review – (AIR)

MoneyMorning on 9th February 2012

The first is to see how much money you’ll make by holding it. The higher the yield, the more money you’ll earn.

The second reason is to use it as a guide for how risky the stock is. The higher the yield, the riskier the stock.

And the third reason is to judge whether it’s an income stock or a growth stock. New companies and those with uneven cash flow tend to be growth stocks. Mature companies or those with consistent cash flow tend to be income stocks.

We mention this because of the hoo-ha surrounding the high dividends you can collect if you own Australian bank stocks. [Read more →]