Clear winner and loser in 2017/2018 survey

Why are so many wanting to reduce the profit of our banks when the vast majority of all superannuation funds hove some exposure to them. Is it a desire to have a lower value for our superannuation? or just that people like bitching?

Cheers, Ken Ellis

Hiya Kenneth.

I think it is human nature to bitch,and accept that if everybody repeats something then it must be true, and great wisdom.

I keep annual reports.Looking at WBC and ANZ around 1991 when they were suffering, net interest margins were around the 4.5% mark.When they came back to profit most years the profit as a %age of assets is 1%.That is almost constant from 1991 until now.Net margins have fallen to around the 2% mark (less for NAB).Yet since then politicians,crowds,experts, all repeating the same thing, huge profits (where),how could it not be true.

CBA funds me so in 1996 if my memory is correct they almost had 100 billion in gross assets.Net profit of almost $1 billion.Net margins of around 3.8 or3. 9 %.They have been so constant in net profit,always 1% or 1.1% of gross assets.Net margins down to around 2.07%.

I would think shortly CBA will have gross assets of $1 trillion,which will produce net profit of $10 billion.No doubt politicians will have their crocodile tears,vote for me and I will do something about these huge profits.I wish they would explain how 1% is a huge profit margin after taxes and expenses

Graham, You state that last year cash outperformed listed property and fixed interest. Also it appears that respondents to the survey have fixed interest as third worst performing asset class in 2017-18. I think your next survey should split fixed interest into fixed and floating because the floating rate securities have done very well over the past year eg Esltree Funds Management, who invest in listed convertible preference shares and subordinated notes (commonly known as hybrids) returned 13.7%...not a bad return considering _the volatility is only circa 22% of its comparable equities.

Graham, on your newsletter talking about ripping off existing customers, my bank offers walk in or “blow in” new customers 3% pa on their Maxi Savings account. Despite being a loyal customer over many years, they could only get me up to 2.7% after first stating that 2.55% was the rate for “high worth” existing customers. Bring on the Royal Commission!