Pete Wargent blogspot

Co-founder & CEO of AllenWargent property advisory, offices in Brisbane (Riverside) & Sydney (Martin Place) - clients include hedge funds, resi funds, & private investors.

4 x finance/investment author - 'Get a Financial Grip: a simple plan for financial freedom’ (2012) rated Top 10 finance books by Money Magazine & Dymocks.

"Unfortunately so much commentary is self-serving or sensationalist. Pete Wargent shines through with his clear, sober & dispassionate analysis of the housing market, which is so valuable. Pete drills into the facts & unlocks the details that others gloss over in their rush to get a headline. On housing Pete is a must read, must follow - he is one of the better property analysts in Australia" - Stephen Koukoulas, MD of Market Economics, former Senior Economics Adviser to Prime Minister Gillard.

"Pete Wargent is one of Australia's brightest financial minds - a must-follow for articulate, accurate & in-depth analysis." - David Scutt, Business Insider, leading Australian market analyst.

"I've been investing for over 40 years & read nearly every investment book ever written yet I still learned new concepts in his books. Pete Wargent is one of Australia's finest young financial commentators." - Michael Yardney, Australia's leading property expert, Amazon #1 best-selling author.

"The most knowledgeable person on Aussie real estate markets - Pete's work is great, loads of good data and charts, the most comprehensive analyst I follow in Australia. If you follow Australia, follow Pete Wargent" - Jonathan Tepper, Variant Perception, Global Macroeconomic Research, and author of the New York Times bestsellers 'End Game' and 'Code Red'.

"Pete's daily analysis is unputdownable" - Dr. Chris Caton, Chief Economist, BT Financial.

Invest in Sydney/Brisbane property markets, or for media/public speaking requests, email pete@allenwargent.com

Wednesday, 15 August 2012

So much for the margin squeeze! (CBA slam-dunks a $7 billion profit - after tax)

In spite of muchos talk of higher funding costs, Commonwealth Bank today announced a full year cash profit after tax of a shade over $7.1 billion. That's the highest ever reported in Australia by a non-mining company.

While embittered mortgage holders remain morose that banks are not passing on the full rate cuts announced by the Reserve Bank, Commonwealth and the rest of the gang continue to do exactly what they are compelled to do by their constitutions: maximise profits and returns for their owners, the shareholders.

This is the downside to only having four major banks. The restrictions on mergers, takeovers and indeed, any significant change in the banking system at all, all make for more stability, but the banks do operate a form of hegemony, so mortgage holders have little direct defence if they get stiffed on mortgage rates by the majors. They may simply have to look outside of the big banks in search of better rates.

The Reserve Bank stats warn us that on a price-to-book-value ratio measurement at least, major Aussie banks are the among the highest valued in world. Perhaps so, but $7 billion after tax is one heck of an earnings report (and the price/earnings ratios the banks trade at are by no means spectacular, from around just 9.7 times for NAB to approximately 12.4 for Commonwealth).

The earnings were pretty much in line with what analysts expected, but shares in CommBank (CBA) still crept by more than 1% to above $56 per share.

CBA is still very popular with investors due to its healthy dividend yields, its full year dividend paying a whopping $3.34 per share. That's very nice. Compare and contrast to the weak dividend yields of our resources stocks.
Note: CommBank serves up one quarter of Australia's housing loans. Commonwealth announced today that its loan impairment expenses dropped by 15% in 2012.

They instead elect to report here on a minor and inconsequential rise in mortgage delinquincies between Q1 and Q2 2012, despite them actually being stable for the first half of the year.

I suppose we all find what we are looking for if we look hard enough. 'DYOR'!