Guru: The CBA’s $7.6 billion profit … decadent and obscene!
The Commonwealth Bank announced an annual profit of $7.6 billion yesterday. The figure was an 8% increase in profit result over the previous 12 months – read CBA site announcement here.
The final dividend, fully franked, came in at a 9% increase.Surely the 8% profit increase got the attention of the framers of our tax policy.The CPI (Inflation) for the 12 months to June 2013, the same reporting period of the CBA result, was 2.4% – sourced here.
The CBA’s result is three times the inflation rate, and this in a record low-interest rate environment.
Many things come to mind, but the bile rises most when we see Governments attacking the mining industry via a MRRT when the boom is almost over, yet the Banks attract no ‘super-tax’ scrutiny even when they report ever-increasing profits while the residential mortgage market struggles all across the Nation.
Some food for thought – the CBA’s margin on assets was reported as 1.1% in an interest rate environment where official cash rates over the last 12 months have fallen from 3.5% to 2.5%, sourced here – does not the 1.1% margin look grossly high given where Interest Rates ended the year?
The most recent rate cut in Aug 2013, was matched by the Banks on the same day, yet after previous rate cuts during the year, the Banks delayed passing on the rate cut, and the value of their cut was often less than the RBA’s cut amount.
The shareholder return was reported as above 18%, and that is exceptional for those who own CBA shares.
How would the Government go about increasing the tax take from the Banks – the franking credits give tax breaks to shareholders, if a ‘super-tax’ were introduced, the impact on shareholder returns would be significant. The debate centers around the returns to shareholders, at the expense of mortgage holders and other debt holders inflating Bank profits because the Banks play ‘ducks and drakes’ with official rate cuts.
I think the Banks are fair game, what did they pay the Government for the Guarantee during the GFC? If the Government does not act in trimming the excess the Banks are struggling to hide, then the MRRT would have to be seen as a discriminate policy.