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Articles by John Kavanagh

John Kavanagh is the founding editor of The Bank Investor.

Thorn Group's strong earnings growth catches analyst's eye

Thorn Group has reported revenue growth of 20 per cent for the six months to September and a 30 per cent increase in net profit. The result, announced last week, was boosted by the addition of earnings from National Credit Management Ltd, which was acquired in March. Net profit for the half was ... More
Published on Monday, 28 November, 2011 Filed under small institutions

What the analysts are saying: CBA out of favour

Banking sector analysts took a stick to Commonwealth Bank last week, after reviewing its September quarter earnings update. While only one investment bank, Citi, downgraded CBA to a "Sell", most analysts cut their earnings forecasts for the bank. Analysts did not like the fact that Commonwealth's ... More
Published on Monday, 21 November, 2011 Filed under CBA

Regionals struggle to produce sustainable return on equity

The build-up in capital adequacy by Australian banks in anticipation of new regulatory requirements is having a much bigger impact on the returns of regional banks than on the majors. A KPMG study of the financial performance of regional banks over the past year, released last week, shows a ... More
Published on Monday, 21 November, 2011 Filed under BoQ, Bendigo & Adelaide, Suncorp

Mortgage Choice looks for diversification

One of Australia's biggest home loan brokers, Mortgage Choice, is accelerating its push into new market segments to counteract the impact of weak demand for mortgages. Mortgage Choice chairman Peter Ritchie told shareholders at the company's annual general meeting last week that, "We continue to ... More
Published on Monday, 21 November, 2011 Filed under brokers

Credit Corp upgrades earnings forecast

Receivables manager Credit Corp issued revised earnings guidance last week, with a forecast that net profit for the 2011/12 financial year would be between A$23 million and $25 million. Credit Corp made a net profit of $21 million in the year to June. At the release of its 2010/11 results, in ... More
Published on Monday, 14 November, 2011 Filed under small institutions

What the analysts say: Higher liquidity has its price

Efforts by regulators to take risk out of the banking system can have unintended consequences. The requirement for banks to hold more liquid assets is designed to ensure that they can ride out market disruptions but may also have the effect making banks more sensitive to market volatility. In a ... More
Published on Monday, 14 November, 2011 Filed under results

Cost of funds headaches worsen for banks

Getting a read on the Australian effects of the European-induced stress to credit markets can be difficult. Banks by and large have sold little debt offshore since markets become much more complicated in August. And other pricing indicators, such as credit default swaps, leave a lot to be ... More
Published on Monday, 14 November, 2011 Filed under funding, ANZ

Banks committed to DRPs

Leading bank chief financial officers have committed their organisations to maintaining dividend reinvestment plans, despite criticism from some quarters. DRPs are popular with private investors but not so warmly received by institutional shareholders. Banks' management of their dividend ... More
Published on Monday, 14 November, 2011 Filed under ANZ, NAB, Westpac, investor returns

What the analysts are saying: little upside for banks in the year ahead

Banking sector analysts have highlighted disappointing second-half results in their wrap-ups of the big banks' 2010/11 financial reports, questioning where the growth will come from in the year ahead. In reports to clients, they have noted that outlook statements have gone from being confident ... More
Published on Monday, 7 November, 2011 Filed under ANZ, NAB, WBC, results

NAB: the big results season improver

National Australia Bank has won the race for best performer in the 2010/11 annual bank results, based simply on the improvement in its key indicators, with ANZ running second. Return on equity: PwC's banking partner, Mike Codling, said the banks did a good job of producing increased returns for ... More
Published on Monday, 7 November, 2011 Filed under ANZ, CBA, NAB, WBC, results

Costs rising faster than revenue at Westpac

Costs may rise faster than revenues for the second year in a row at Westpac next year, as the bank soldiers on with an array of projects designed to strip out expenses and underpin a lift in product sales.  This will dampen earnings growth. Most of the payoff may not flow through until 2013 or ... More
Published on Monday, 7 November, 2011 Filed under WBC, results

NAB sticking with a long-term growth strategy

National Australia Bank chief executive Cameron Clyne is determined not to "short term the business" in response to mounting regulatory, funding and competitive pressures. Clyne said yesterday that he had spent his three years as chief executive digging NAB out of a hole and he did not intend to ... More
Published on Monday, 31 October, 2011 Filed under NAB, results