Higher rates are of course good for bank profits but not great for their customers who are borrowing the money. With economies so delicate at the moment it wouldn't take much to stall growth again and I can't see how that would be good for banks without growth. Ideally you want growth at 4% with interest rates at 2% and inflation at 2%. The challenge for the US is getting growth to 4%. They haven't managed it for the last 15 years so I won't be too sure interest rates are going to rise with any speed.
Ramerci I agree with you on the benefits the uk po tie up will bring to bkir. It was a master stroke imo. However it will be a long time before it generates half of bkir profits. According to HY 2014 results profits from joint ventures were 39m with a total boiUK profit of €57m. Total bank profits were €327m and if you add in the reduced impairments charges profits were €444m. Reduced impairment charges will undoubtedly be a feature of results for a few years yet. I look forward to the day when uk profits equal irish profits but it may take some time.
a rise in interest rates is good for banks profits , the financial sector in america is the sector with least growth in SP across the pond in 2014 , when yellen talked of an increase in interest rates a few months ago , the financial sector started coming back
Yes they will but not for at least 3 years and probably 5.
I wouldn't even be sure the US or the UK will go mad raising rates yet either. The fed has been blamed many times for raising rates too late after recessions in the past and letting inflation get too far ahead and then struggling to control it. That's why there is pressure on the fed to raise rates sooner rather than later now. When you add in the serious amount of qe in the system you can appreciate their fears. However, after a banking and financial crisis like the world and the US has had there is evidence to suggest inflation will not necessarily follow normal patterns. A huge amount of the free cash has been absorbed by banks and non productive assets. It never made it to the general economy. Anyway, time will tell.
BoI figures, homework done in time, a clean balance sheet ,etc. is just the presentation business card. For this sp to grow what is needed is a small constant influx of investors that pushes the price up slowly but constantly because they are CONVINCED of the obvious. BoI will have a stable predominant market position in Ireland with eventually a clean balance sheet and better benefits. If it will go up to 2 or 1.5 € or 1€ ... who knows? The important thing is that it is been seen as a solid and stable business and as the mayor player. Those factors will bring investors, small and big, looking for security to this share.
I would still buy at .293 for exactly the opposite reasons allmoyne but still arriving at the same conclusion. Baring an absolute economic miracle europe will have low interest rates ( between 0.5% and 1.5% ) for the next 5 years. More likely the US and the UK will have higher rates over the same period of time. Add in QE and this will result in the euro falling in value and thus spurring export growth.
Bkir will piggyback on a resurgent irish economy. Ireland will for once be caught in the perfect storm for growth. A stressed euroznoe needing the ecb to keep rates low to kick start growth. QE of some type leaving the banks with plenty of cheap cash to lend to our growing export companies. As things stand I believe bkir has plenty of cash to lend out already. For now finding suitable opportunities to lend to is the bigger problem. But an improving UK and US economy will buy our products. With the devalued euro the rest of Europe and by far our biggest trading partner should benefit as well so exports throughout Europe will grow for us.
Employment in ireland will continue to grow. Consumer confidence will continue to grow. Domestic demand will continue to grow. Bkir profits will continue to grow.
My reason is that this is a stock with potential to be worth about twice today's value within 5 years and there is not much risk. If I have to wait for it to be a pension in 20 years that is the chance I take.
However I know why you ask the question because I was asking a similar question about a week ago.
The significant point about the question is that in asking it you are displaying a questioning type of thinking and I think we are going to see much of that among investors here soon.
The point is that people en mass are essentially the same and are thinking the same and there will be a result or consequence of this. I am unsure what that will be.
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