Month: November 2019

22 September 2019

The banking sector has underperformed the Australian market since 2015, and the results for the year to 30 September 2019 suggests that another year or two of underperformance is still to come.

The latest results were dismal. Cash profits fell by 7.8% ($2.9bn) year-on-year. Revenue growth was minimal to negative as the big banks lost market share to their newer and more agile competitors. Banks’ cost to income ratio rose by 313 basis points on average, ranging between +200bp and +540bp. Net interest margins (the spread between banks’ lending rates and their cost of funds) narrowed for all banks, dropping as low as 1.94% for the first time. Customer remediation charges hit $4.6bn for the year, making a total of $8.0bn to date… [read more]

23 November 2019

In the wake of the GFC, and again after the June 2016 Brexit referendum, many fund managers left the City of London for European shores, in search of lower tax rates and less regulation, not to mention the fear that Brexit would cut them off from their clients’ money. But most of the English fund managers who flocked to Switzerland have long since departed. The fund managers were unable to adapt to Swiss cultural norms, or they deemed Switzerland too “boring”, or for many other non-substantive reasons in a long litany of typical English whinges. The “boring” moniker is one viewed with much mirth and amusement by the Swiss, given that no fewer than 5 (five) Swiss cities rank in Europe’s Top 10 cities for cocaine consumption. (In case you are curious, Barcelona tops the European league tables for consumption of “devil’s dust”… [read more]

5th November 2019

In February this year, we outlined the risks of a financial crisis in China. (Published as one of our Geld Zug commentary articles: https://arminiuscapital.com.au/preparing-for-the-china-crisis/). One of the triggers for a financial crisis was a rash of problems among China’s small banks. This trigger may be taking shape right now. Another small bank suffered a run last week, making it the fourth small bank to get into trouble since May… [read more]