Banks

[barry_1]

Take a look at first and second teir banks,do your own research,let us know what u think.Far as i can see the worst is probably over.Articles in Moneyweb say banks are not going to be punished as much as we thought by the new credit act.Banks have been on the downward curve for a long time and possibly oversold.Good PE ratios ,in my opinion only, good summer runs probable.Time to get away from pure resources for a while.

[CHATTYCHAT]

Banks had their final run 'contravening' sound credit practises in May. In future their bad debt provision because of their own wringdoing should lessen up. Higher interest rate level will come into play which may negatively impact on bad debt. Dawie Roodt claimed this morning that the public sector wage increase will support higher CPIX and next rise in interest level is expected without doubt. Thus: taking into account what barry said - definitely go for banks. But when?

[YNWA]

Barry....just a thought.....could be some negative implications from the Commission....general public opinion of the banks is pretty much on a par with Telkom....but then again if they continue to churn out the results public opinion doesn't really matter to the investor. As Simon said CPI has an amazing business model....just a pity they can't accommodate Joe average yet.....current & business accounts, internet banking & possibly home loans by the end of the year.

[Preston]

Just to respond to Mr Y Posting "just a pity they can't accommodate Joe average yet.....current & business accounts, internet banking & possibly home loans by the end of the year" NCA and its implcation was first addressed when the act reared its ugly head and not when it became applicable to the general public. I would say that you are about 2,5 year behind the curve.

[YNWA]

Apologies Mr P....what was inferred was that "current & business accounts, internet banking & possibly home loans by the end of the year" would be in place by the end of the year. The building blocks are being built as we speak....internet banking probably in the next 4 months, the others to follow if there are no e-Natis type problems.

[Preston]

No need to apologies, this is a general discussion forum. The one aspect that really surprise me , is the amount of loophole that the NCA failed to address. If you can recall one of "Zarp Posting" where he mentioned one of several possible loophole of NCA.

[YNWA]

All in good humour.....I wish I was 2.5 years behind the curve....it would mean that I am 47.5 years old instead of 50......knowing where the market is today I could have played it like a virtuoso piano man.....& yeah I think more loopholes will come out the woodwork yet. Adios.

[Preston]

Mr Y . I did not mean 2.5yrs in an saractic manner, but rather from a strategic viewpoint to combat any legal /buisness risk that the banking industry is faced with. Barry, only guideline if you want to invest in banks. 1. Identify which bank has got the largest % of the homeloan book (look at financial) and then consider what the likely impact or stress test on these portfilio will be. 2. Look at the reserves that the bank have.. I would go for bank which has the most healthy reserve....(here you can analysis the balance sheet as well as statement of change in equity ...Very important) 3. Different CEO has different mindset, some is interested in share price whilst other are interested in the number of customer they get (read the commentary of the financial statement) PS these are only guideline and not investment advise

[barry_1]

Very interesting,i value all your opinions,am looking at ROE ,bad debts,turn over etc.have not decided for my self yet.Years ago i kept SBK and NED for about five years,made a packet then.That is not to say they are the ones.First Rand very impressive now,a toss up between them or RMB.ASA still seems top heavy,i prefer SBK at this time.Today i bought ABIL in small quantity as i think all banks might still have further to fall,giving me more time to decide.

[barry_1]

Two very good articles on banks on Moneyweb today.I see also banks going up today.At the moment on my short list SBK,NED,RMB.

[barry_1]

At the moment fancy SBK,but i don't think much of the instalments available, i don't know enough about EDS therefore i'll steer clear of them.Either i might buy the shares or go for my second favourite which is a toss up at the moment betwen the other two.

[SimonPB]

EDS is an instalment - but with a monster difference. They have a barrier, now the barrier is in the money, so if barriered there is a cash payment (equal to the VWA price of the next 2 days - so payout will be variable). Further barrier is about half way from strike and spot at issue. more at investwarrants.com

[barry_1]

Thanks i'll study further,always willing to learn.

[#14]

i think that should read: investec.com. U should dowload their brochure. EDS are worth a try - they're like instalments on steroids, but safer than warrants. OMO

[SimonPB]

www.investecwarrants.com. is the correct version

[barry_1]

i can no longer stand idly by and watch,this morning i bought SBK warrants on SBK and FSR,which seems the easier choice than installments at this stage.

[john_1]

Barry. Turbo installment or Hoteds are insallments, only differece is instead of paying 50% of the share price plus interest you pay 30% plus interest for exactly the same benifits. All the div and all the capital gain. As far as the barrier is concerned just never ever hold the thing to the point were it hits the barrier. As you will pay the full cost of borrowing for the year even if the thing ( instument) is only a couple of days old. one last thing. The gearing is dependent on how much capital you employed relative to the current share price, below 2.8 time means the share price has rissen since the instument was issued and above 2.8% means the share price has fallen since issue. STD chareges a lot more interest then investec but with investec there is the barrier. ( not a problem if you never let it get there) so I always take the investec hotedd over the turbo if the gearing is similar and I intend to hold more than a couple of days.

[barry_1]

Thanks John,very enlightening,these are points that no manual can tell one,only a trader that does the actual trades,normaly i'm very conservative when it comes to investing my money,as i live off my income,how ever i'de like to try these soon.This is where the forum is invaluable as besides meself many other traders pick up these hints.

[john_1]

Barry It is how I make my money as you get a much beter div yield. as you can get more underlying exposure with the same cash, also a great way to trade capital gain for non taxable div income.

[Brazen]

Great explanation john. The clearest I've seen, SEQ should get you to write their brochure cos I'v never been able to understand it. I just am nervous of things with barriers, funny things can happen in markets, as you know.