Author Topic: Banking 2.0 & IFSR9  (Read 2170 times)

cubsfan

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Re: Banking 2.0 & IFSR9
« Reply #10 on: June 28, 2018, 01:36:54 PM »
The best looking bank in the UK is Metro Bank. It's growing like crazy in a no growth market.
There are structural reasons for this - but you need to dig into it to understand way.
The UK banking market is a cartel, run for the banks, not for the population.
Metro is cleaning up, and will continue to clean up for quite some time.

IMO


LC

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Re: Banking 2.0 & IFSR9
« Reply #11 on: June 28, 2018, 04:57:57 PM »
We are in a giant bull market. And the banks have benefitted greatly from this. I don't think the next five years will look similar to the last.
"Lethargy bordering on sloth remains the cornerstone of our investment style."
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brk.b | cash

Viking

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Re: Banking 2.0 & IFSR9
« Reply #12 on: June 28, 2018, 06:10:47 PM »
We are in a giant bull market. And the banks have benefitted greatly from this. I don't think the next five years will look similar to the last.

LC, the last 5 years have not been all that kind to the big banks:
1.) tens of billions paid out in fines
2.) exceptionally stringent regulation were imposed by regulators; costs to comply were very large
3.) banks were required to build up/hoard capital (with minimal dividends and stock buybacks)
4.) interest rates in US fell to generational lows (grealy reducing net interest income)
5.) constant fear US was about to slip back into deflationary spiral

Since the Trump election, the last 20 months have been kind to the banks.
1.) no more massive fines (small ones, yes)
2.) we have passed peak regulation; will be reduced in coming years
3.) era of capital hoarding has passed; capital returns now are at or exceeding 100% of earnings
4.) interest rates are now on a solid path of increasing with benefits flowing through to net interest income
5.) US GDP growth is solid, with forecasts of 3-4% real growth for Q2.

Given how worried everyone is right now, I am guessing US growth will surprise to the upside in the 2H 18. As much as I may not like Trump the man, I think much lower taxes, much less regulation, solid GDP growth and a pro US trade message will result in a stronger US economy and job growth.

You are right, the nest 5 years will be different. My guess is what happens will likely be quite different from what people are talking about today. Inflation rising more quickly than expected may be the real threat that few people are talking about right now. What if the US economy continues to deliver solid growth for the next 4 or 5 years... many experts are predicting a recession in late 2019 or 2020.   

sleepydragon

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Re: Banking 2.0 & IFSR9
« Reply #13 on: June 28, 2018, 08:08:36 PM »
Corporate profits are currently at 10% of GDP. The long term average is around 6%:

http://fortune.com/2017/12/07/corporate-earnings-profit-boom-end/

In 1998 (or 1999) annual meeting, Buffett has said 20% of GDP is definitely Not possible over the longer term (he was referring to the high PE and forward profits at the market at that time).

I guess we will be fine if GDP gets to 4%? But all these talks about trade wars is not helping..

rb

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Re: Banking 2.0 & IFSR9
« Reply #14 on: June 28, 2018, 08:59:04 PM »
US GDP print for Q1 just go revised down. But let me spare everyone the suspense... The US won't grow at 4% GDP. In fact growth, unless something weird is going on, going forward we'll most likely see weaker growth than in the past years. There's nothing wrong with that, btw.

A bump in margins and profits to GDP can happen even from the levels we're at. But probably nothing too dramatic. Banks could do quite well as the US could be going into a credit cycle.

Spos

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Re: Banking 2.0 & IFSR9
« Reply #15 on: September 20, 2018, 12:11:43 PM »
http://www.cityam.com/263414/rbs-talks-bank-england-over-share-buyback-plans-

Buying back shares from the government is the best thing they can do.  They've announced a small dividend, but they should focus on this and buy back as much as they can in shares if the government is willing to do it at these prices.  CET ratio is 16.1% and should keep increasing so there is a lot of excess capital.