Pete Wargent blogspot

Co-founder & CEO of AllenWargent property advisory & buyer's agents, 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.

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Thursday, 11 August 2016

CBA reports $9.5bn profit (Mining cliff 80 per cent done)

CBA reports $10 billion profit

The Commonwealth Bank of Australia (CBA) reported its full year FY2016 results yesterday, including cash NPAT of $9,450 million (up 3 per cent), and a strong cash return on equity of 16.5 per cent.

CBA announced a fully franked final dividend of $2.22 per share, taking the full year dividend to a tidy $4.20 per share.

Home loan arrears remain low, although at the state level there has been a notable increase in Western Australia.

It was interesting to note that CBA now believes that drop in mining investment is now 80 per cent complete. 

If correct, this is hugely significant for the Australian economy, because excluding the very significant drag from falling mining investment the rest of the economy almost by definition must have been growing at a reasonable pace.

It's been a theme I've been revisiting on this blog for a long time now. 

It's now been nearly four years since resources construction activity peaked, and sooner or later activity will stop falling.

The official ABS figures charted below only run to 31 March, but they tend to support CBA's view. 

That said, it does appear to me as though capex has a way to fall yet in Western Australia (unlike in Queensland where the medicine has largely already been taken).

It's also worth noting that 30 per cent of mining job losses still lie ahead, according to CBA's assessment, so there is still undoubtedly some pain to come for resources regions.