Tuesday, November 16, 2010

CBA's ponzi-free quarter

From BankingDay today:
Monthly data on lending finance from the Australian Bureau of Statistics shows a mild rise in commercial finance commitments over the last quarter, after months if declines. Personal lending volumes are rising gently are back over levels of new business experienced before the financial crisis.

These factors gave rise, in the context of CBA's recent trading, to the financing by the bank of net lending growth through net deposit growth over the quarter, with no need to fund the growth from wholesale markets.

Operating conditions, however, for CBA remained “challenging”, credit growth remain “muted” and “margins continue to come under pressure from higher average funding costs and price competition” the bank said.

CBA repeated one optimistic line from its 2010 profit guidance: “We expect a gradual improvement in operating conditions in the second half of this financial year, as the economic recovery strengthens and system credit growth rebounds.

This bloggers' interpretation is a little different. It's a small ray of hope that CBA's growth didn't demand that it expanded its, and our, already ludicrous foreign debt.

If the RBA and banks can keep the nation in a state of near terror over rate rises and house prices for the next five years, without tipping capital-growth reliant investors into actual terror, and commodity price strength lasts at least some of the way, then we may only have to deal with our lack of competitiveness in tradable goods to survive.

Many big "ifs" there.

Given housing was flat and falling pretty much everywhere throughout the quarter, it goes to show that in order to correct our huge banking imbalance, we're all going to get poorer.


Septimus said...

Gee, if the CBA gets really hard up for cash, maybe Ralph Norris could spare his $60 Mil, and Gail could spare her $55 mil. - that's another 3000 residential mortgages for the CBA & Westpac!!!

Anonymous said...

Hi David,

I notice that US Ten year bonds are getting creamed last few sessions. I cant help but wonder how much more Aussie banks will pay for funding if the Fed gets traction and the U.S recovers yields will go much higher, if people are complaining about 30bps pushing them over the edge I cant imagine what a couple of hundred bps would do to them.

Any thoughts ?



Septimus said...

Re: 12:42 - Ooops - no wonder they wouldn't let me be a CPA - 300, not 3000.

David Llewellyn-Smith said...

Hi Anon,

You are right about the dynamics, yes. I still think US housing is so wretched that its unlikely.