Commonwealth Bank posted a statutory Net Profit after Tax (NPAT) of $9.23 billion, a 2% increase from the 2015 financial year. Net Interest Margin (NIM) was down 2 basis points to 2.07% with operating income growing 5% at a faster rate than expenses (4%) leading to a 0.40% improvement in the cost-to-income ratio to 42.4%. This result is broadly credit [...]
At the end of February, we published “Term Deposits – Past, Current and Future Trends” outlining our expectation that term deposit margins would increase due to competitive pressures between Authorised Depository Institutions (ADIs). Since the commentary was written, term deposit margins have indeed risen by ~0.20%. Figure 1. Term Deposit Spreads Source: RBA, AFMA, BondAdviser As shown in [...]
As most of us know, the fixed income market is generally less liquid and transparent than equity markets. However, fixed income exchange traded funds (ETFs) can help bridge the gap between these asset classes. These ETFs cover a broad range of fixed income type securities. Some ETFs are issuer specific (i.e. corporate, government or semi-government Securities), coupon specific (i.e. fixed [...]
Summary of key points: Both margins and outright term deposit rates have fallen over the past two years; While the Bank Bill Swap Rate (BBSW) is expected to continue the declining trend following the Reserve Bank of Australia (RBA) official cash rate, any further lowering of outright rates on term deposits during 2016 may be offset by the banks potentially [...]
The chase for yield by self managed super funds has been well documented but despite the warnings by regulators, commentators and analysts about further changes to regulations, bank share prices continued to trade well above their long term average (on a price to earnings multiple basis). In a low interest rate environment this demand for yield is completely understandable, but dividends are purely a function of capital [...]
With the spotlight on lower term deposit yields we thought it worth focusing on their liquidity . Essentially, term deposits can be broken before maturity with the issuing bank. There is no broad market determining the price, just a single bank and their deposit pricing systems. The following is a real life example as at 11th May, 2015: Term deposit with major bank yielding 3.3% [...]
BondAdviser is an independent investment research company that specialises in bonds and fixed income securities. We provide investors, advisers, brokers and institutions with research, data, education and tools to help them invest intelligently. Our service is delivered online via an easy-to-use portal. At BondAdviser, our goal is to lift the lid on the fixed income market so that more investors [...]
It’s been a quiet few weeks for the Primary Issue Market in the listed space whilst the traditional Wholesale Bond Market continues to see new issuances from repeat and first time issuers. The domestic banks have been very active, accessing funding in Europe over the past few weeks. Coming off the back of a period of volatility, we expect the [...]
There has been a definite drop in turnover this week with sellers beginning to back off and buyers returning to the asset class. Feedback I am receiving from our private bank clients suggests they are unsure where to invest their funds following the quite severe downturn in equities, negative press surrounding hybrids and cash rates continuing to decline. Those investors [...]
This week we have been focusing on a new tactical trade idea for Qantas. We are far from long-term buyers of the Airline sector but we think given the economic environment things might start to improve. A few months ago Qantas finally acknowledged that it has stopped flooding the market with spare capacity to maintain market share. This is positive [...]
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ABN 31 164 148 467 ‧ Important Information
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.
