Category: Stock Market

It’s well known that the ASX exchange-traded fund (ETF) is an investment vehicle that seems to grow more popular by the day. Offering an accessible and relatively cheap way to invest in entire indexes, ETFs have been around for a while. But this vehicle has really hit its stride over the past few years in particular.

Back in December last year, the Motley Fool covered what was then a record-breaking month of November for ASX ETFs. At the time, we reported that funds under management grew by $4.9 billion over November 2020. That was a new monthly record at the time. We also saw ETFs rise to represent a market capitalisation of $78.7 billion. This was boosted even further to $92.3 billion by the conversion of the sizable Magellan Global Fund (ASX: MGF) to an actively managed ‘open class’ ETF.

Over that month, ETFs also saw a record monthly inflow of $2.5 billion.

Well, fund-provider BetaShares has just released its July 2021 Australian ETF Review. And it seems that momentum is only increasing for the industry.

BetaShares’ report tells us that the month of July 2021 saw ASX ETFs once again break the all-time record for fund inflows. A whopping $2.8 billion made its way into exchange-traded funds over the month. The previous record of $2.7 billion was made in December 2020. Of that $2.8 billion, 90% came from inflows, with only 10% coming from market appreciation.

This also helped push the total market cap for ASX ETFs to a record $118.8 billion. That’s pretty substantial growth from November’s $92.3 billion.

Which ASX ETFs were the standout performers?

The BetaShares report also gives us some interesting insights into which funds are giving investors the best bang for their buck. It names healthcare, followed by cybersecurity and ASX resources shares, as being some of the best performing sectors over July.

In terms of raw inflows, the report names ETFs covering international shares as being ASX investors’ top choice over the month. $1.6 billion found its way into international ETFs. That was around 4 times more than the next category (Australian shares).

BetaSahres also found that 65% of new ETF inflows over the month ended up with just two ETF providers (out of 31). They were BetaShares itself and Vanguard. The top ETF recipient of these inflows was the Vanguard MSCI Index International Shares ETF (ASX: VGS). This ETF received ~$228.3 million in funds over the month. This was followed by the Vanguard Australian Shares Index ETF (ASX: VAS), which received roughly $178 million. Close behind was the BetaShares Nasdaq 100 ETF (ASX: NDQ) with $126.8 million. And the BetaShares Global Sustainability Leaders ETF (ASX: ETHI) with $115 million.

The post ASX investors can’t get enough! ETF inflows hit new record high appeared first on The Motley Fool Australia.

More reading

• Afterpay and Zip were among the most traded ASX shares last week
• VAS share price history: What caused the biggest ups and downs?
• 3 great ASX tech shares that might be good buys
• 3 popular ETFs ASX investors need to know
• 3 excellent ETFs for ASX investors in August

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended BETANASDAQ ETF UNITS. The Motley Fool Australia owns shares of and has recommended BETANASDAQ ETF UNITS. The Motley Fool Australia has recommended Vanguard MSCI Index International Shares ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

from The Motley Fool Australia https://ift.tt/3s7ViTA

The Galileo Mining Ltd (ASX: GAL) share price has jumped into the green, extending the previous month’s climb north.

Today’s gain comes as Galileo delivered an update on drilling results at its Fraser Range drill program.

Let’s investigate further.

Quick recap on Galileo Mining

Galileo is in the minerals exploration business. It holds exploration and drilling interests in Western Australia.

Its flagship projects are the Fraser Range project in addition to the Albany-Fraser Orogen and Norsemen Project.

The prospects cover exploration licences of approximately 492km2 and 351km2 respectively.

At the time of writing, Galileo has a market capitalisation of $48 million.

What did Galileo announce?

Galileo announced that the first two first reverse circulation (RC) drill holes at its Fraser Range site “intersected semi-massive sulphide mineralisation”.

These semi-massive sulphides are predominantly pyrrhotite with minor copper sulphide within “larger zones of disseminated sulphide”.

Moreover, the intersections could signify a “new style” of mineralisation at Fraser Range, according to the company. As such, further economic potential will be assessed “with diamond drilling” after the RC drill sample assays are in hand.

Galileo also completed two drill holes for 428m at its Delta Blues DB2 prospect “with a third hole underway”.

At this stage, the “economic implications of the initial results” regarding its drilling program are uncertain, according to Galileo, and “deeper diamond drilling [is] required” to test further.

Investors can expect lab results back in Galileo’s hands by September, as per the release.

The market has lapped up Galileo’s announcement, pushing its share price higher after hitting an intraday low of 33 cents.

To illustrate, Galileo shares are now exchanging hands at 35 cents apiece, a 4% gain on the day.

Galileo Mining share price snapshot

The Galileo Mining share price has posted a year to date return of 55%, extending the previous 12 months’ gain of 11%.

As a result, Galileo shares have lagged the S&P/ASX 200 Index (ASX: XJO)’s climb of around 25% over the past year.

The post Galileo (ASX:GAL) share price lifts on drill results, up 30% in a month appeared first on The Motley Fool Australia.

More reading

• Why the Galileo Mining (ASX:GAL) share price is racing 12% higher today

The author Zach Bristow has no positions in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

from The Motley Fool Australia https://ift.tt/3fUGCSK

The Andromeda Metals Ltd (ASX: ADN) share price is slightly in the red today. This comes after the mineral exploration company announced a change to its board team.

At the time of writing, Andromeda shares are down 1.88% to 15.7 cents. In comparison, the All Ordinaries Index (ASX: XAO) is up 0.5% to a record high 7,866 points.

Board reshuffle

In a statement to the ASX, Andromeda advised that Nick Harding has tendered his resignation from the board. Mr Harding served as an executive director and company secretary to the company.

In his past 11 years, Mr Harding assisted Andromeda to grow from a junior explorer to an established player in the mining industry. However, he has since decided to retire and pursue other opportunities and personal ambitions.

As such Andrea Betti has been appointed as the interim company secretary until a permanent replacement is found.

Ms Betti, a corporate governance professional, brings over 20 years of experience specialising in accounting, corporate governance, finance and corporate banking. Furthermore, Ms Betti has acted as company secretary for a number of businesses in the private and public sectors.

Currently, she is a director of a corporate advisory firm located in Perth, Western Australia.

Ms Betti is a member of the Institute of Chartered Accountants in Australia and New Zealand and an associate member of the Governance Institute of Australia. She holds an array of qualifications that most notably include a Bachelor of Commerce and a Master of Business Administration.

Mr Harding will continue to contribute in a consulting capacity through a handover phase.

Andromeda chair, Rhod Grivas commented:

On behalf of the Board of Andromeda, I would like to extend our sincere thanks to Nick for his efforts and contribution to the Company over the many years he has served as a Director, CFO and Company Secretary.

Nick has given distinguished service to the Company for more than 11 years and his substantial contribution in guiding the Company through some lean years and the significant transactions that have led to the Company being where it is today, are to be commended. We wish Nick all the very best for the future.

About the Andromeda share price

Andromeda shares have fallen roughly 40% year-to-date, but have risen 200% over the past 12 months. The company’s share price reached a record high of 45 cents in March, before being sold off in the following months.

Andromeda commands a market capitalisation of around $387.5 million, with more than 2.4 billion shares on its registry.

The post Andromeda (ASX:ADN) share price edges lower on board reshuffle appeared first on The Motley Fool Australia.

More reading

• Here’s why the Andromeda Metals (ASX:ADN) share price is jumping 13%

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

from The Motley Fool Australia https://ift.tt/3AnTcSu

The Bitcoin (CRYPTO: BTC) price currently stands at US$45,721 (AU$62,630).

While that’s down about 1% over the past 24 hours, Bitcoin remains up 20% over the past 7 days. And its year-to-date returns are back up to 57%.

The recent rally has some crypto enthusiasts forecasting that the token will sail past its mid-April record highs of US$64,829 to hit US$100,000 by year’s end.

We’ll look at their bullish forecasts shortly.

But first, why has Bitcoin retraced over the past 24 hours?

All eyes on the US Congress

United States President Joe Biden’s US$1 trillion infrastructure package got the green light from the US Senate yesterday (overnight Aussie time). The bill passed 69 to 30, opening up massive new funding for the nation’s airports, bridges and roads.

So, why is that putting pressure on Bitcoin and other cryptos?

Because the bill includes new regulatory oversights and tax implications for virtual currencies.

Addressing crypto investors’ concerns on the issue, Lucia della Ventura, legal compliance manager at financial software company Ledgermatic, told CoinDesk:

The crypto sector itself is new, and leaning on a nascent technology industry for taxes could impair its growth. It is necessary to wait for the final vote, taking into account that several amendments have been tabled as they can potentially change the impact of the bill for companies.

Those amendments were blocked in the final bill, likely leading to today’s Bitcoin price retrace.

Ethereum (CRYPTO: ETH), the world’s second largest crypto by market cap, is also edging lower, down a slender 0.2% over the past 24 hours to US$3,137.

But the spectre of an added regulatory and tax burden out of the US hasn’t derailed Bitcoin bulls’ enthusiasm following the recent rally.

Bitcoin to US$100,000?

Craig Erlam is a senior market analyst at OANDA Europe. According to Erlam (quoted by Bloomberg), “Bitcoin has found its groove once more over the last week. Now very much back into bullish territory, the question is how far it can go this time around.”

Meltem Demirors, chief strategy officer at crypto fund provider CoinShares, shares Erlam’s bullish outlook, saying Bitcoin is “roaring back”.

He said that the new regulatory measures passed within the US infrastructure bill aren’t likely to impede the current bull run. In fact, Demirors says:

[M]any investors perceive this as positive news and a positive catalyst because it’s clearing up a lot of the confusion or some of the uncertainty. And I think what’s being demonstrated as well is the crypto community is no longer some esoteric corner of finance.

Meanwhile, Bloomberg Intelligence’s Mike McGlone is eyeing the token breaking above US$100,000. Comparing Bitcoin to Ether’s run higher, McGlone said, “It’s still got plenty of room to get the old high. And guess what? If it just follows Ethereum, it goes to $100,000.”

Joining the ranks of Bitcoin bulls is Fundstrat Global Advisors’ Tom Lee. Lee believes Bitcoin could hit US$100,000 before we ring in the New Year.

Foolish takeaway

Before anyone runs out and loads up on Bitcoin, Ether, or some of the smaller high performing altcoins, remember that just a few weeks ago, many crypto experts were forecasting Bitcoin could retrace to US$20,000 before finding a floor.

A fall to US$20,000, or far lower, certainly remains a possibility.

As for investors eyeing a potential charge higher for the world’s leading crypto, never invest more than you’re prepared to lose.

The post Bitcoin to US$100,000 in 2021? Why these crypto bulls are digging in appeared first on The Motley Fool Australia.

More reading

• Bitcoin is now up 40% in just 3 weeks. What’s going on?
• Beyond Bitcoin – the risks and rewards of investing in altcoins
• Is the cryptocurrency bear market over?
• ASX 200 Weekly Wrap: Blockbuster Afterpay deal turbocharges ASX to new record highs
• Bitcoin price back in the green but this wealth manager won’t touch it

The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Bitcoin and Ethereum. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

from The Motley Fool Australia https://ift.tt/3fRSgh8

The Westpac Banking Corp (ASX: WBC) share price is bringing up the rear of the big banks today after the Reserve Bank of New Zealand (RBNZ) issued a formal warning to Westpac.

According to the RBNZ, Westpac failed to disclosure more than 8,000 corporate transactions to overseas residents. The transactions allegedly occurred between July 2018 and February 2019.

Under New Zealand law, international wire transfers of NZ$1,000 or more must be reported to the New Zealand Police’s Financial Intelligence Unit.

The Westpac share price is currently $25.87, 1.15% higher than its previous close. While that’s a good day’s performance, it’s behind that of the other big banks.

Right now, both the ANZ and NAB share prices are currently up 1.42% and 1.3% respectively. Meanwhile, shares in Commonwealth Bank (ASX: CBA) have gained 1.29%.

Let’s take a closer look at the RBNZ’s warning to Westpac.

Westpac issued a warning

The Westpac share price is lagging following a warning from the RBNZ.

The RBNZ’s warning is the result of a survey conducted in the wake of AUSTRAC’s money laundering accusations posed to the bank in 2019.

Following the accusations from the Australian watchdog, the RBNZ conducted a survey into all New Zealand-registered banks with a particular focus on Westpac.

RBNZ states it found the failings during an on-site inspection. Specifically, it found Westpac failed to report transactions as required by New Zealand’s Anti-Money Laundering and Countering Financing of Terrorism Act.

AUSTRAC levelled similar accusations at Westpac almost 2 years ago. Last year, Westpac settled the civil case brought by AUSTRAC for $1.3 billion.

The Westpac share price only slipped 0.1% on the back of the settlement.

The RBNZ’s deputy governor and general manager of financial stability, Geoff Bascand, commented on Westpac’s alleged failures to report, saying:

This formal warning reflects the importance of the prescribed transaction reporting regime in building an intelligence picture across New Zealand’s financial system, and reiterates the seriousness with which we view non-compliance with the [Anti-Money Laundering and Countering Financing of Terrorism] Act.

Westpac share price snapshot

The Westpac share price is having a good run lately.

It has gained 33% year to date. It is also 45% higher than it was this time last year.

The post Westpac (ASX:WBC) share price lags the big banks’ after NZ ‘formal warning’ appeared first on The Motley Fool Australia.

More reading

• Everything you need to know about the CBA (ASX:CBA) $6bn share buyback
• Will the CBA (ASX:CBA) share price be pressured by lower loan profitability in FY22?
• ASX 200 midday update: CBA results and $6bn buyback, IAG falls
• Commonwealth Bank (ASX:CBA) share price record high after dividend boost
• Why the ANZ (ASX:ANZ) share price is pushing higher today

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. 

The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

from The Motley Fool Australia https://ift.tt/3fRWqFS

The Commonwealth Bank of Australia (ASX: CBA) share price has been a positive performer on Wednesday following the release of its full year results.

Investors responded so positively to the result that they drove the banking giant’s shares to a new record high of $109.03.

What is getting investors excited?

While CBA’s strong profit growth was no doubt a highlight, its capital return is arguably what is getting shareholders most excited and helping to drive the CBA share price higher.

The market was expecting some form of capital return from CBA, particularly given recent buyback announcements by its peers, but the quantum of the CBA share buyback has caught investors by surprise.

The CBA share buyback

This morning Australia’s largest bank announced a $6 billion share buyback.

This represents approximately 3.5% of its issued capital and compares very favourably to the market’s expectations. For example, Goldman Sachs was forecasting a capital return of $3.6 billion.

CBA’s Chairman Catherine Livingstone said: “CBA’s strong capital position and our progress on executing our strategy mean that we are well placed to continue to support our customers and manage ongoing uncertainties, while also returning a portion of surplus capital to shareholders. After careful consideration, your Board has determined that the Buy-Back is the most efficient and value-enhancing strategy to distribute CBA’s surplus capital and franking credits.”

What you need to know

Unlike recent buybacks announced by other banks, the CBA share buyback will be undertaken off-market via a tender offer. This is far more complex than an on-market buyback where you can just sell your shares via your broker as normal.

Shareholders that wish to take part in the CBA share buyback can offer to sell their shares at a discount in the range of 10% to 14% inclusive.

Alternatively, shareholders can simply elect to sell their shares at the final CBA buyback price. This will be within the discount range mentioned above.

Why take part in the CBA share buyback?

You might be wondering why you would want to sell your shares at such a discount? Especially given how you would have no issue offloading shares at the market price today.

There is a good reason for this. CBA has obtained a draft Class Ruling from the Australian Taxation Office indicating that, for Australian income tax purposes, the CBA share buyback price will comprise a capital component of $21.66 per share, with the remainder deemed to be a fully franked dividend.

This means that if CBA bought back shares at $96.66, for example, $21.66 would be a capital component and $75.00 would be treated as a fully franked dividend. This clearly has significant tax benefits depending on your tax status.

In addition, another smaller positive with the off-market transaction is that it does not incur brokerage fees.

What’s next?

The CBA share buyback goes ex-entitlement on 17 August. This means shares acquired on or after this date are not eligible to be bought back.

The buyback period will then open on 30 August before closing on 1 October. After which, contracts will be entered into on 4 October and the proceeds will then be paid to successful shareholders on 8 October.

Eligible shareholders will also still receive the CBA dividend. This is regardless of whether they offer their shares up as part of the buyback. That is scheduled to be paid on 29 September.

The post Everything you need to know about the CBA (ASX:CBA) $6bn share buyback appeared first on The Motley Fool Australia.

More reading

• Will the CBA (ASX:CBA) share price be pressured by lower loan profitability in FY22?
• ASX 200 midday update: CBA results and $6bn buyback, IAG falls
• Commonwealth Bank (ASX:CBA) share price record high after dividend boost
• CBA (ASX:CBA) sued by whistleblowing governance manager
• CBA (ASX:CBA) share price on watch after FY21 results & $6bn buyback

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

from The Motley Fool Australia https://ift.tt/2VLgYc8

The Whitehaven Coal Ltd (ASX: WHC) share price lifted today, stepping into the green from the market open.

While there is no market-sensitive information today, roaring thermal coal prices continue to push ASX coal shares higher.

Let’s investigate further.

Thermal coal prices are having a party

A raft of tailwinds has pushed coal prices higher this year, partially from COVID-19, resulting in an unbalanced demand-supply calculus.

As such, ASX coal companies look well positioned to capitalise on these market crosscurrents for the time being.

For instance, Commonwealth Bank analyst Vivek Dhar notes that shortages in China compounded by the trade wars between Australia and China earlier this year are two major catalysts for current prices.

In addition, Chinese demand for thermal coal over summer saw strengths due to a “severe drought” earlier in the year, “increasing its (China’s) reliance on coal-fired power plants,” reported The Australian today.

Furthermore, demand in Europe and the United States “soared over the last month” as trends normalise from the pandemic-induced lockdowns.

But – when will the hangover start?

However, the consensus is that the sustained dislocation between share and commodity prices for resources shares is “unlikely to remain”.

For instance, ratings agency Fitch anticipates the market to reach its top by the end of the year. Fitch believes “a normalisation of currently strong Chinese demand,” amid other factors, will lead to a correction in coal prices.

CBA holds the same posture, viewing that China’s import volumes “are likely to ease after the summer ends… and reserves are added to avoid power shortages.”

Whitehaven shares are now exchanging hands at $2.37 – a 3% jump into the green from yesterday’s close.

Whitehaven Coal share price snapshot

The Whitehaven Coal share price has posted a year-to-date return of 44%, extending the previous 12 month’s climb of 73%.

Both of these gains have outpaced the S&P/ASX 200 Index (ASX: XJO) jump of around 25% over the past year.

The post Whitehaven (ASX:WHC) share price leaps 3% amid soaring thermal coal prices appeared first on The Motley Fool Australia.

More reading

• Here are the best and worst performing ASX 200 energy shares of 2021
• Here are 3 heavily traded ASX 200 shares today
• Brokers name 3 ASX shares to buy today
• Why EOS, Integrated Research, Michael Hill, & Whitehaven Coal are charging higher
• ASX 200 midday update: Rio Tinto update disappoints, Evolution sinks

The author Zach Bristow has no positions in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

from The Motley Fool Australia https://ift.tt/2VJn4dk

ASX 200 lithium shares have rallied for a third-consecutive session this week, scoring fresh all-time highs across the board on Wednesday

The largest ASX 200 lithium player, Pilbara Minerals Ltd (ASX: PLS) has rallied almost 15% this week, adding another 3% today to $2.40.

The soon-to-be merged Galaxy Resources Limited (ASX: GXY) and Orocobre Limited (ASX: ORE) have also rallied a respective 6.23% and 5.90%.

JPMorgan upgrades its ASX 200 lithium shares

The lithium sector rallied strongly on Tuesday, many of which posted double digit percentage gains following bullish commentary from JPMorgan.

As covered by the Motley Fool, JPMorgan upgraded the five ASX 200 lithium shares under its coverage including Pilbara Minerals, Galaxy Resources, Orocobre, IGO Ltd (ASX: IGO) and Mineral Resources Limited (ASX: MIN).

All five shares were either upgraded or currently overweight rated.

The broker believes that there isn’t enough lithium product to meet demand in the medium-term.

As such, the broker upgraded its long-term lithium hydroxide price by 12% to US$14,000 a tonne.

The bullish sentiment and buying activity might have carried over into Wednesday’s session, driving further gains across the board.

More good news for the lithium industry

There seems to be no shortage of good news for ASX 200 lithium shares.

Last week, President Joe Biden signed an executive order with a non-binding target of at least half of all new vehicles sold in 2023 to be electric.

Reuters reported a positive joint statement from General Motors, Ford and Chrysler saying they aspired “to achieve sales of 40-50% of annual U.S. volumes of electric vehicles … by 2030”.

There have been some electric vehicle talks back at home, with the New South Wales transport minister, urging the Morrison government to accelerate the move to electric vehicles by using them as federal government fleets, according to The Guardian.

The post Why ASX 200 lithium shares are surging to new highs appeared first on The Motley Fool Australia.

More reading

• Which shares are the biggest movers on the ASX 300 this Wednesday?
• Mineral Resources (ASX:MIN) share price slips on FY21 earnings
• How does the Mineral Resources (ASX: MIN) share price perform during lockdowns?
• The ASX reporting wrap-up: Challenger, Megaport, James Hardie
• Here are the top 10 ASX shares today

Motley Fool contributor Kerry Sun has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

from The Motley Fool Australia https://ift.tt/3CDf4Ll

The AMP Ltd (ASX: AMP) share price has opened quite strongly today, up 1.13% at the time of writing to $1.077 a share. That’s a little better than what the S&P/ASX 200 Index (ASX: XJO) is doing today so far. The ASX 200 is currently up 0.42% to 7,594 points.

This move comes as AMP prepares to unveil its interim FY2021 earnings report tomorrow. And since the AMP share price is today just a touch off of its all-time low of $1.04 a share, many investors will be watching with bated breath.

So with AMP’s interim results imminent, it might be a good idea to look back and see what AMP delivered in its last earnings report that we saw back in February.

What did AMP deliver back in February?

Well, in its full-year results back in February (yes, AMP’s calendar is a little backwards), AMP didn’t exactly excite investors with what it had to show. As we reported at the time, the AMP share price dived roughly 9% after these numbers came out. Here’s a summary of what the company presented ~6 months ago:

• Net cash outflows of $8.3 billion in FY20 (including $1.8 billion of early release superannuation payments)
• a 6% drop in assets under management to $255 billion
• Net profit after tax (NPAT) of $295 million, a 33% fall from the previous year’s $439 million
• No FY20 final dividend declared

The two bright spots were arguably the company’s AMP Capital and AMP Bank divisions. AMP reported that AMP Capital delivered an NPAT of $139 million for FY20. That was down from the $204 million from the previous year, but still a strong metric considering the period included the coronavirus-induced 2020 share market crash.

The company also reported that AMP Bank’s total deposits increased by $1.7 billion over the period to $16.1 billion. The Banking division brought in $119 million of NPAT, only a $22 million drop from the previous year in the face of the market crash.

What happened next?

Of course, this last earnings report from AMP ended up being a little less than well-received. As we mentioned above, the AMP share price cratered upon the release of this February report, dropping 9%. And it continued to go from bad to worse.

As of today, AMP has never reclaimed the share price levels we saw before the release of this report. Indeed, AMP shares today are down more than 30% from where they were when investors got their hands on these earnings.

This probably hasn’t been helped by AMP’s ‘white knight’ CEO Francesco de Ferrari leaving the company a month or two after this report was released.

Needless to say, AMP’s shareholders will be hoping for a very different reaction tomorrow when the company gives us another look at its books. At the current AMP share price of $1.08, the company has a market capitalisation of $3.52 billion and a price-to-earnings (P/E) ratio of 71.

The post How did the AMP share price respond last earnings season? appeared first on The Motley Fool Australia.

More reading

• ASX 200 midday update: CBA results and $6bn buyback, IAG falls
• 5 things to watch on the ASX 200 on Wednesday
• ASX 200 rises, Challenger and James Hardie up on results
• Here are the top 10 ASX shares today
• These 3 ASX 200 shares were the most traded this Tuesday

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

from The Motley Fool Australia https://ift.tt/3AtthJ2

The Commonwealth Bank of Australia (ASX: CBA) share price is currently up more than 1% after the bank’s FY21 result release.

There were a number of statistics that showed an improvement compared to FY20, as well as a large share buyback.

Christmas in August for CBA shareholders

The big four ASX bank announced an off-market share buyback of $6 billion. CBA said its strong capital position and progress on executing its strategy mean it’s well placed to support its customers and manage ongoing uncertainties, whilst also returning a portion of excess capital to shareholders.

CBA’s board considered a number of reasons for this buyback, such as the resilience of the domestic economy, the capacity of the bank to adequately absorb potential stress events and the strength of its balance sheet. The buyback will benefit shareholders with a lower share count, which supports return on equity, earnings per share (EPS) and the dividend per share.

On the dividend side of things, CBA also announced a bigger payout. The board decided on an annual dividend per share of $3.50 per share, representing an increase of 17% on FY20.

Regarding the dividend, the bank said that its strong capital position and disciplined execution continues to support “strong and sustainable returns” to shareholders.

It’s going to target a full year payout ratio of 70% to 80% of cash net profit. But it’s going to take into account a number of factors, including the long-term average loss rates.

Profit growth

One of the main things investors like to look at when considering the CBA share price is the profit.

CBA reported a 19.7% rise of statutory net profit after tax to $8.84 billion. Cash net profit grew 19.8% to $8.65 billion.

The bank said that net profit increased due to improved economic conditions and outlook resulting in a lower loan impairment expense (of $554 million, down 78%) and a “strong operational performance.”

However, whilst CBA’s net profit increase, the net interest margin (NIM) declined 4 basis points to 2.03%.

The bank explained that decline was due to higher liquid assets, with the impact of the low interest rate environment largely offset by actions the bank has taken, lower wholesale funding costs and a favourable funding mix.

CBA warned the NIM could fall further

The NIM is an important profitability metric for banks, which is why ASX banks tell investors what has happened with the NIM in each reporting period.

A higher NIM means the bank is making more profit on its loan book. A lower NIM means its profitability is falling.

In CBA’s result release, it said:

Looking ahead, we expect a number of headwinds to impact group NIM in the next financial year. These headwinds include: the continuing low-rate environment, price competition across both lending and deposit products, unfavourable mix impacts of customers switching to fixed rate home loans and higher rate deposits, and higher liquids.

However, CBA did say that those headwinds will be partly offset by the benefit of lower funding costs from the RBA’s term funding facility.

Time will tell how CBA and investors react to the prospect of a lower NIM in FY22.

CBA share price keeps rising

Whilst it’s up around 1% today, it has actually risen by almost 9% in the last month.

The CBA share price has risen by 24% over the last six months and in the past year it has gone up 44.6%.

Outlook

CBA CEO Matt Comyn shared his thoughts on the outlook:

Looking ahead, we anticipate ongoing economic impacts and earnings pressure from lower interest rates. We will continue to invest in the business to reinforce our product offering to our retail and business customers and extend our digital leadership. Through disciplined execution and our people’s care and commitment, we will continue to deliver for our customers, community and our shareholders as we build tomorrow’s bank today.

The post Will the CBA (ASX:CBA) share price be pressured by lower loan profitability in FY22? appeared first on The Motley Fool Australia.

More reading

• ASX 200 midday update: CBA results and $6bn buyback, IAG falls
• Commonwealth Bank (ASX:CBA) share price record high after dividend boost
• CBA (ASX:CBA) sued by whistleblowing governance manager
• CBA (ASX:CBA) share price on watch after FY21 results & $6bn buyback
• 5 things to watch on the ASX 200 on Wednesday

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

from The Motley Fool Australia https://ift.tt/3Av42WP