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Selling short on the banks was not a good idea
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The Commonwealth Bank yesterday reported a cash profit of $4.77 billion for the first half, down 2.1% on the first half last year.
The bank noted a decrease in home loan arrears and a 3.1% reduction in operating expenses. The Bank’s Tier one capital ratio is a healthy 10.1%. The interim dividend is steady at $2 per share fully franked.
Those who sold and short sold the banks late last week had to take some medicine as the majors all rallied strongly following the release of Mr Hayne QC’s recommendations from the Royal Commission.
One may wonder what all the fuss over the past year has been about given the reaction in the market to the recommendations. Indeed, reading through the recommendations there looks to be some positives for the banks.
On to economics, and the Statistics Office released the retail trade number for December which will have retailers and the Reserve Bank wondering what to do. Retail sales fell, yes fell, 0.4% in December to $27 billion. It was no surprise then that the Reserve Bank maintained the interbank rate at 1.5%.
All major bourses in the Northern hemisphere closed higher overnight, the FT100 taking the yellow jersey with a solid 2.1% gain. This leaves our index futures trading 24 points higher at present.
On another note, those holding cryptocurrencies in the Quadriga digital platform should be concerned as the founder has passed away. The problem being that he died being the only person with the password to gain access to the platform.
Alex Moffat is a director at Joseph Palmer & Sons.