and Mr Mc presents some valuable points for our consideration which only reinforce my sentiments - we have 80MPH winds promised tonight - living about 150 yards from the seafront I just hope that I am still in my bed when I wake up in the morning.
As I forecast some time ago, the markets would be subdued for the next while, waiting for someone to turn on the light at the end of the tunnel. The promised living wage, oil prices falling, has to put some life into all economies, provided that the employers can afford to pay what some would say are proper wages.
Unfortunately most of our financials believe that the way to larger profits is to slash and burn, which can be justified sometimes in response to world events, but every time that they respond in this way to competition that very often they have created, they are deliberately making the poor old horse (the economy) lame by shrinking the very thing that we all depend on.
Financial services and particularly factored finance to business, is very rarely beneficial for long term employment and creating lasting and worthwhile employment in the economy.
So far as the tie up between BOI and The Post Office is concerned, I would wait a while before I got excited about the arrangement. Our Post Office, since the sell off, has been reduced locally to the level of your average country store.
It is not all gloom however - spring is coming - when the jet stream shifts finally we will ALL feel better because the monsoon that we have enjoyed for the last weeks will be over.
unless Richie has told you that first hand it's still not a certainty.
I think the bank themselves will be disappointed with some of the figures they are seeing from Q4. To make money they need to lend money. they are NOT going to be lending enough in my opinion. It's not their fault. they have the cash for sure but there are simply not enough customers borrowing. It comes down to various reasons but 2 main ones. CB lending rules and not enough houses on sale. I posted the planning applications numbers a while ago so it will be 2017 before house numbers for sale start to change even a little. It will be the same length of time before the effects of the CB rules start to level out. Even then lending here will be a fraction of normal lending rates. I think we are now at a numbers not far off those seen in the 70's. poor lending has the knock on effect of a stagnant NIM. The less they lend at the higher 3.5..4% rate the less chance of diluting the number of cheaper tracker loans they carry.
So as i mentioned before it comes down to the UK. lending numbers from there have been good overall and hopefully BoI will pick up a nice %. Non mortgage personl lending was good so you would have to think that the Post Office network would benefit from that. Now for the but, BUT the exchange rate has turned just at the wrong time and is going to take the shine of the UK numbers. Worse, from a dividend point of view this Britex thing will leave the bank management unsure where the rate is heading and leave them unable to promise a 2016 dividend on the back of good UK figures.
The poor performance of the pension we saw in the last interim statement will have healed itself a bit and won't be such a drag on CET1 ratios at year end.. It remains a problem though with the result that the ratio will need to be pushed higher to safeguard against any future deterioration. 13% plus looks likely which will further divert earnings away from a dividend.
Last and by know means least. Have we learned anything from the recent past? In very uncertain times is it wise to promise a dividend when the worlds economic path is facing uncertainty. We may be the poster boys of Europe (again) and heading into an election when the government is promising all sorts of tax cuts and good times (again) but surely the wise thing is to hold what they have for a few months more rather than make a promise they may regret.
Up until November i was 70..30 for a dividend in 2016. Now I'm 70..30 not expecting one. Very happy to be proved wrong though and if anyone cares to argue the case for one please feel free.
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