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Business Description: Commonwealth Bank of Australia (CBA) is an Australian retail bank. Its core business is the provision of a broad range of banking and financial products and services to retail, small business, corporate and institutional clients. CBA conducts its operations primarily in Australia, New Zealand and Asia Pacific region. It also operates in several countries including United Kingdom and USA.
Strategy Analysis: CBA generates superior shareholder returns by optimising revenue growth, productivity, capital efficiency and staff culture. The strategy is to invest in the competitive advantages that are difficult to replicate. The bank specifies its three primary sources of advantage as industry-leading application of technology to financial services, a customer-focused staff culture and a strong balance sheet. Each of these respectively supports returns on equity by making CBA more attractive to customers in a multi-channel banking world (an intangible asset), enhancing customer loyalty and satisfaction (another intangible asset), and reducing bad debts expense below peers¬ī (a cost advantage). Lower losses on bad debts give CBA more room to price keenly to win and retain business while remaining sufficiently profitable. The group will continue to invest in all three sources of advantage. CBA¬īs industry-leading technology initiative is the $1.1bn Core Banking Modernisation project, which rolled out real-time banking and same-day settlement across the depositor and borrower customer base. The project is effectively complete and CBA will be the only major bank offering these features across its customer base, an advantage which will take competitors years to replicate given the project was launched in 2008. CBA¬īs policy on acquisitions is to acquire only when it can create more value for shareholders than they can create for themselves.
Commonwealth Bank of Australia reported NPAT up 1% to $3.66bn for the half-year ended 31 December 2012. Cash NPAT for the current half was $3.78bn, an increase of 6%. Revenues from ordinary activities were $22.92bn, down 4% from the same period last year. Diluted EPS was 221.7 cents compared to 222.1 cents last year. Net operating cash flow was $3.62bn compared to $8.34bn last year. The interim dividend declared was 164.0 cents compared with 137.0 cents last year. While many of the group's customers are facing challenges, this is not translating into a deterioration of credit quality. However, given the uncertain outlook for both the global and domestic economies, the group remains cautious maintaining a strong balance sheet with high levels of capital, provisioning and liquidity - $128.0bn as at 31 December 2012.
By Michael McCarthy (chief market strategist, CMC Markets) 19/12/2014 |
Traders and investors caught short heading into the FOMC scrambled for cover in Europe and the US, in many cases driving indices to their best one day performance for 2015.
By Betty Lam (Sales Trader, CMC Markets) 18/12/2014 |
Lead by the Fed-fervour offshore, Australians shares jumped on the Yellen cheer wagon. The material and energy stocks were back in vogue as both sectors gained over 3% in morning trade.
By Michael McCarthy (chief market strategist, CMC Markets) 18/12/2014 |
In spite of a frenzied pre-mortem, a benign statement from the US Federal Reserve‚Äôs Open Market Committee and steadying commodity markets drove investors back into share markets overnight. A calmer, stronger ruble helped offset European growth fears, highlighted in the overnight session by further declines in inflation.
By Betty Lam (Sales Trader, CMC Markets) 11/12/2014 |
Offshore jitters sent ripples through to Australian stocks. The open saw the local equities take 65 points off the index, catalysed by a mass-exit in energy stocks, yet again.
By Ric Spooner (Chief Market Analyst, CMC Markets) 10/12/2014 |
Yesterday‚Äôs news on Greek politics and China‚Äôs bond market came at a time when US and European stock markets have extended rallies and pushed valuations higher. This makes those markets vulnerable to downward corrections as profit takers act to avoid missing out.
BR Securities Australia Pty Ltd 2/12/2014 |
December 2014 could go down as a nasty moment in Australian finance. MYEFO will reveal a deteriorating budget deficit and the UNFCCC meeting in Lima, Peru will provide the agreement, to be ratified in Paris in 2015, on how much (or little) CO2 is to be allowed into the atmosphere from 2020.
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