Finance & Fury Podcast

Today’s question comes from Jake. He asks “should I sell my bank shares, given the recent fall out from the royal banking commission?”   IMPORTANT: This episode comes with a general advice warning! I’m not telling you to buy or sell... Instead I’m going to run through what the future of banking might look like given what we have seen so far.   But let’s break it down. The nature of the beast – Where profits come from Banks are diversified revenue models – out of top 5, they make up top 4 Lending and banking – CBA 45%, NAB 92.8%, ANZ 49%, WBC 39% Wealth Management – CBA 9.3%, NAB 7.1%, ANZ 3.2%, WBC/BT 10.6% Banks are now selling off all the wealth management parts of their businesses. AMP (a diversified financial service company) generates 72.8% of their revenue from wealth management/financial services   So, what does this mean? ... Prices are down Banks are at their 52-week low, CBA at a nearly 3-year low AMP – steady decline since 2015 from $6.83 to $4.15 – 37%   What will happen to profits? Big 4