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Banks, Economy, Housing Thread - BOOM 2.0

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    Banks, Economy, Housing Thread - BOOM 2.0

    Now I know that there are oil worries, and that the € v $ has an effect, but Irish banks are absolutely plummeting in the last few months. A look at the ISEQ Financial (http://uk.finance.yahoo.com/q?s=%5EIFIN ) and you can see they are off by nearly 40% of their Feb 07 high.

    Some of them are on very, very low p/e ratios.

    Anyone have any views on why they are plummeting?
    Last edited by fitzy73; 3rd-May-2017, 20:29.
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    #2
    House of cards?
    It is useless to attempt to reason a man out of a thing he was never reasoned into.

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      #3
      Maybe Joey - rumours abound that all is not well with some of them, (access to liquidity) but I'm surprised that one of the biggest fallers is AIB, which is supposedly less exposed to property developers little er, misdemeanors.
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        #4
        Share prices reflect growth in activity. Housing starts are down something like 66% so mortgage lending growth has peaked. Are they really on very low p/e's or is it that the p/e's have retracted to more normal levels?
        My computer thinks I'm gay
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          #5
          Could be right sewa, but I *think* that normal P/e's for banks are 9 or 10 or thereabouts.

          AIB is currently about 7.5, and as I said it is less exposed to mortgage lending, which makes it even more curious.

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            #6


            Originally posted by fitzy73
            Maybe Joey - rumours abound that all is not well with some of them, (access to liquidity) but I'm surprised that one of the biggest fallers is AIB, which is supposedly less exposed to property developers little er, misdemeanors.

            they would be more exposed to the american merket though with their interests over there which would account for some of it


            also the confidance in the banking sector in general is down with finance firms showing losses from overexposure to the US market and rumours of underestimation of exposure. It all has a knock on affect the sector overall


            that along with the slow down in the irish economy and I'm sure several other reasons
            "Some people don't know their easy lives... I wouldn't be so ungrateful" - Fiacre Ryan - #AutismAndMe

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              #7


              Originally posted by fitzy73
              Could be right sewa, but I *think* that normal P/e's for banks are 9 or 10 or thereabouts.

              AIB is currently about 7.5, and as I said it is less exposed to mortgage lending, which makes it even more curious.

              The AIBcapital markets employeesthere have been told there is no bonus this year...not that they ever paid the best......as well as their mortgage exposure here you have to factor in loads of other stuff.....they have significant CDO exposure AFAIK....as well as buying up US mortgage books for a good portion of last year and the early part of this....


              Stay clear of Anglo too for those of you out there...there is serious rumours about them doing the rounds the past few weeks...


              On the other hand,those that listened to me 2 months ago(Old dog) should be cleaning up having shorted all the banks I told them about!!!
              Seas suas agus troid!

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                #8


                Mortgage business represents around 10% of the main Banks' business so a bit of a fall off there shouldn't be too damaging. I think it's more to do with the concern over the sector due to the sub-prime problems in the US. With a number of Banks reporting in the next few weeks,confirmation that they're not exposed to sub-prime could steady the ship. Yields are pretty impressive though. Bank of Ireland on over 6% of 2008 dividend for instance.
                The early bird catches the worm but it's the second mouse that gets the cheese.

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                  #9


                  suppose some of you might be interested in this:





                  Banks were weaker in the US overnight and stories that the ratings agencies have received default notice on $5bn of derivatives is supplementing the sense of nervousness. The likely suspension of the US Treasury-supported "Superfund" is also crystallising the sense of concern in investors minds about the substantial uptick in write-offs at banks in the coming months. Nowhere is this more obviously expressed than on credit default swaps which are at least at five year highs on Citigroup, Morgan Stanley and Merrill Lynch. CDS swaps at C have tripled in the past 3 weeks and high spreads on the Irish banks in recent weeks indicates the domestic banks are also not surprisingly caught in the malaise. This process has an uneasy sense of going from bad to worse as the lower debt instrument valuations fall, the more the banks have to mark down and sell off, which of course drives valuations lower - a worrying vicious cycle. On the corporate newsflow front this morning, while ING appears to have come in ahead of consensus, of more relevance is Societe Generale which has missed consensus on further write-downs and also HVB Real Estate, which has also missed consensus. SocGen indicates that it based its write-downs on "a worse case forward-looking scenario" that total industry losses from subprime mortgages will reach $200bn. According to the FT today, only $28bn has been taken to date by large banks. Gulp. This means that presumably there is further to come. We still believe that write-offs will move up a few notches at year end as auditors (fully audited accounts), regulators (ahead of Basel II) and company directors (SOX) all get involved. In the meantime, banks will hoard liquidity into the year end so expect spreads over base to remain elevated through the year end and up until the next results season. Elsewhere on the corporate front and, of more relevance to home, BZW reported Q3 figures this morning - headline figures are up. At the headline level, net income came in at PLN225.7m versus consensus of PLN224m. As such, we are unlikely to be changing our BZW input in our AIB model.
                  Seas suas agus troid!

                  Comment


                    #10


                    If you compare the US ADR of AIB shares versus a US financials ETF performance then it has roughly tracked that market, and not done worse, although the Euro helps AIB.


                    Merrill Lynch and Citigroup have lost their CEOs in the last week, after booking some of the largest financial losses in history, each around $8bn AFAIK, and Citigroup's could go to $13bn, from the subprime mess. People are wondering who else could have large write downs coming, and the Irish banks can't be excluded from the list that could have some exposure.


                    The major Irish banks are exposed to the US and British markets, the US housing market prices have gone down like ours, and the forecast for British housing is gloomy. France and Spain have recorded price decreases recently in housing, so it's not surprising that financials will be hit.


                    The ECB has been far better than the English Central Bank at dealing with the sub prime fallout, it's far less likely that a Northern Rock situation would be allowed happen in the ECB region, even if their is a few more months in the financials fallout.

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                      #11
                      It seems to be another example of 'America sneezes and the world catches a cold' The US of A can't keep it's problems to itself, it has to share! The issues with the international credit markets have far reaching consequences.

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                        #12


                        depending on what grade and salary structure you are on the AIB CM bonus's can be good, especially the profit based bonus's


                        must see what they've been told from people i know there


                        one thing AIB does have however is BZWBK, their Polish bank which has been making decent profit the last two years and should keep going up.


                        They have invested a lot of time and money into it
                        "Some people don't know their easy lives... I wouldn't be so ungrateful" - Fiacre Ryan - #AutismAndMe

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                          #13

                          Originally posted by LLCOOLJ14

                          Stay clear of Anglo too for those of you out there...there is serious rumours about them doing the rounds the past few weeks...
                          Hearing that on other boards as well - not being able to access funds?

                          I think I might take a leaf out of OD's book and start buying those Kruggerrands ..
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                            #14
                            Invest in Poland boys, It's on the up and up. One of these days they're going to stop coming back and start building up their own country. we taught them how to do it for gods sake.
                            The trick is getting to the second set of horses.

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                              #15
                              Nov. 7 (Bloomberg) - Irish banks fell as Merrill Lynch & Co.


                              cut its earnings estimates for the three biggest lenders by as much


                              as 7 percent, citing the risk of a sharper-than-expected slowdown


                              in construction.


                              Allied Irish Banks Plc, Ireland's largest lender by market


                              value, fell 2 percent to 15.02 euros as of 2:10 p.m. in Dublin.


                              Bank of Ireland Plc fell 1.6 percent to 10.85 euros, while Anglo


                              Irish Bank Plc, the country's third-biggest lender by market value,


                              fell 4.2 percent to 10.49 euros.


                              Irish house prices are falling after eight interest-rate


                              increases by the European Central Bank since late 2005 doubled


                              borrowing costs. While real estate developers are curbing the pace


                              of homebuilding, there's also a rising risk that builders won't be


                              able to repay loans, Merrill said.


                              ``We see several very clear indications that Ireland's housing


                              market will continue to slow and forecast further falls in home


                              prices, building and loan growth,'' said Phil Ingram, a London-


                              based analyst at Merrill. He cut his share price estimate for


                              Allied Irish to 20.30 euros from 22.90 euros.
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