Can you see banks raising interest rates?

Actually Nope.

Fully independent, own office, own staff, work long hours, no uniform and on the QT much more "courageous" with financing than any bank officer could afford to be.

FYI Peter

Being a CBA employee goes beyond wearing their badge and uniform. It's hardly independent if your only source of business is one lender.
 
Being a CBA employee goes beyond wearing their badge and uniform. It's hardly independent if your only source of business is one lender.

That the thing. He is not independent. I can say CBA Innovations are not employees as CBA dumped the ones in Chatswood who then linked up with ANZ. In that case it was 10 staff.

For the average Joe a savy Booker is best.

For us, we have two businesses, multiple IPS and family trust. He can access it all via an computer and then work the numbers. We get very good rates but not market best all the time because he cannot always match the nest deal. But with mutiple IPS and CX collateral we canot change around any how.

As for the personal banker approach of CBA this is rubbish. Pimply 22 year old who don't know how to balance their phone account let alone an IP is waste. I think they have given up there.

Peter
 
As for the personal banker approach of CBA this is rubbish. Pimply 22 year old who don't know how to balance their phone account let alone an IP is waste. I think they have given up there.

I've met a few Big 4 relationship managers in my time and they are all pretty incompetent. The good ones these days go to the head office rather than in the branches...
 
I've met a few Big 4 relationship managers in my time and they are all pretty incompetent. The good ones these days go to the head office rather than in the branches...

Big Agree Here.

I use to get new one every 6 months. Same invite to Coffee in Martin Place. Same attractive young girl. Then either move up or get pregnant.

PS I always took my wife.

Peter
 
Mike Hurst - Bendigo Bank: With housing loan rates priced where they were before last Friday, banks were making no money from those loans

So why the outcry?

Why the outcry ?

Because, rightly or wrongly, we don't believe the banks when they say:-

"With housing loan rates priced where they were before last Friday, banks were making no money from those loans"



For the masses to change their perception in this regard, the Banks need to explain in detail exactly how they still make their multi-BILLION dollar profits if they are making NO MONEY from home loans.


While they are at, the Banks would also need to demonstrate that if they ceased doing home loans (since they make no money) then they would still be able to make the same multi-BILLION dollar profits.

Somehow, I think we would find their other revenue streams / profit centres are tied to the fact that they are in the home loan business which gives them a leg up into all of a customer's banking business (credit cards etc). If they ceased their home loan business, these other areas would suffer and suddenly the profits would slide, which says to me that even if (a big if) they make no direct profit from the home loan, they are making plenty of indirect profit.
 
Banks derive lots of their income from their wealth management areas and commercial lending. They're not 100% dependent on residential loans.
 
You have to distinguish between privately created money and government created money.

Government money is the money made by the government - e.g. cash, notes, coins.

Privately created money is the money created by the private banks. In Hong Kong, for example, many of the bank notes are actually created by the two big banks in HK, Standard Chartered and HSBC. More commonly in Australia, private money is on a computer screen (banks 'lend' you money by creating a computer entry). Under the laws, the bank-created money is the same as government money - so you don't notice the difference. The permission given to banks to 'create money' is fractional reserve banking and is the foundation of our current monetary system.

Mech, I have been reading/watching stuff on fractional banking for many years and still can't answer that question.

If you listen to the bankers, every dollar they lend is borrowed or sourced from their balance sheet. There is a statuary reserve mandate that says they can't borrow more than ten times their equity. OK, but the concept of fractional reserve banking says that you can lend out multiples of your deposits without borrowing the difference. A lot of shonks do that at the highest levels of banksterism but I just don't believe our retail banks have the option.

Thanks guys for that. For some reason, I'm skeptical that banks here don't take part in that sort of practice in some shape or form. Most didnt know what the US banks were doing till the dust cleared....

On another note, thats exactly why plenty of Australians are up in arms with the banks and its because of their record profits with the latest one CBA having the cheek to increase their BLR's just a day to announcing their profits - cant' remember if it were 6 monthly profits ...
 
Banks derive lots of their income from their wealth management areas and commercial lending. They're not 100% dependent on residential loans.

Undoubtedly.

But we still don't believe them when they say the home loans added ZERO to the business (directly or indirectly).
 
I have a prospectus in hand for ANZ Subordinated Notes. They want to raise $500 mil @ the bank bill rate + 2.75 to 3% [subject a book build]. That works out at 7.11% at the lower premium.

They're not going to be keen to offer discounts on standard variable with THAT money.
 
Why the outcry ?

Because, rightly or wrongly, we don't believe the banks when they say:-

"With housing loan rates priced where they were before last Friday, banks were making no money from those loans"

My sympathy for the banks will begin when they are not making profits in the billions and/or record breaking profits.
 
What profit would you like them to make?

According to this, they have made a 19% return on equity and a 1% return on assets. I know I'd like more than 1% ROA!

Profit is profit no matter how you boil it down, and BILLIONS of dollars is sh*tloads of it in anyone's language.
 
It doesn't matter what the RoA is because most of the money is not their own assets. It is money created by them...so basically the return is infinity. I would love that kind of return thank-you-very-much.

+1 with Aaron on this. The number to look at is return on equity(other ppls money) not assets... not sure if the accounting still groups active loans as assets and that would make the ROA percentage lower.
 
I have a prospectus in hand for ANZ Subordinated Notes. They want to raise $500 mil @ the bank bill rate + 2.75 to 3% [subject a book build]. That works out at 7.11% at the lower premium.

They're not going to be keen to offer discounts on standard variable with THAT money.
Got a WBC one today. They want $750 mil for Converting Pref Shares with an indicative price of 7.6 to 7.9%.

They are not going to be ringing you offers if that's what they have to pay for money.

A Q. for Token Funder: If the RBA drops int rates, does the 90 day bill rate automatically follow?
 
Somehow, I think we would find their other revenue streams / profit centres are tied to the fact that they are in the home loan business which gives them a leg up into all of a customer's banking business (credit cards etc). If they ceased their home loan business, these other areas would suffer and suddenly the profits would slide, which says to me that even if (a big if) they make no direct profit from the home loan, they are making plenty of indirect profit.

Which is why some lenders have a hard time getting rid of brokers..........with up to 50 plus plus % of their NTB client base coming from brokers, its no surprise

interestingly at least one lender is currently pursuing an active policy to increase their proportion of direct business rather broker his business, and in some ways having to "unlevel" the playing field a little To make this happen.

From a business persons and sales person's point of view it's not surprising that retail branches are really struggling to bring in new business compared to the broker network. Human nature is that we will always go for low hanging fruit, which for a branch is their existing client base, and the weeny the incentives that most lenders provide to their salespeople are not sufficient to attract new customers.

Therefore while the costs of running a branch may look low to some, the returns on that cost are obviously smaller than at in part relying on broker buisness.

Thanks

Rolf
 
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