Banks are financial institutions that provide banking and financial facilities to customers. The primary function of any bank is to accept money and lend to its customer. On a growth trajectory, experts believe that assets of a thousand large banks is worth ~$US 100 trillion. The Banking industry is divided into two categories, i.e. Commercial Banking and Investment Banking.
Commercial banks assemble deposits from households and make funds available for investment. Investment Banks raise capital (cash/money) for companies, needed to expand and grow their businesses (sell securities to public investors as stocks or bonds).
The S&P/ASX 200 Banks Industry Sector settled at 2.343.1, up by 4.5 basis points or 0.19% on 9 December 2019.
On the other side, another sector that is exposed to constant investor traction is the Consumer staples section. Essential products including food and beverage, household goods and even alcohol and tobacco form the consumer staples sector. Non-cyclical in nature, consumer staples are in demand year-round, irrespective of the economy’s stance.
The S&P/ASX Consumer Staples sector settled at 12,660.4, down by 60.3 basis points or 0.48% on 9 December 2019.
Let us discuss two stocks from these sectors- Commonwealth Bank of Australia and Webster Limited.
Commonwealth Bank of Australia (ASX: CBA)
CBA offers integrated financial services. The Bank’s vertical includes Retail Banking, Business and Private Banking, Institutional Banking and markets, ASB New Zealand, Wealth management and International Financial Services. The Bank employs approximately 48,238 employees and has 7.0 million active digital customers. Recently CBA announced that due to no holders, TAHIYE has been terminated from the Close of business of 28 November 2019.
Change of Director’s Interest
On 2 December 2019, CBA announced the change in the interest of one of its directors (Anne Louise Templeman-Jones), effective 26 November 2019. The number of shares held by her after the change was 913 fully paid direct ordinary shares and indirect 593 fully paid ordinary shares.
The company also announced to change in the interest of its director (Genevieve Bell), effective 26 November 2019. The number of shares held by the director after the change were 366 fully paid Direct ordinary shares and 1,020 PERLS VII Capital Notes held jointly by Professor Genevieve Bell and Professor Diane Bell as trustees of the Bell Super Fund.
Becoming a Substantial Holder
On 27 November 2019, the Bank became the substantial holder of RHIPE Limited and holds 7,192,809 fully paid ordinary shares/ person’s votes and 5.13 per cent of voting rights.
The Bank also announced a change in its interest in Webjet Limited and now has 12,638,892 person’s votes and 9.32 per cent of voting rights.
To know about the recent change in the leadership team click here
Divestment of Australian life insurance business
On 1 November 2019, CBA announced that the joint cooperation agreement with AIA Australia Limited (AIA) in relation to CBA’s Australian life insurance business (CommInsure Life) has been implemented.
An upfront payment of $500 million from AIA Australia Limited, was received by the Bank and the economic interest associated with CommInsure Life was transferred to AIA. The twenty-five-year distribution agreement between CBA and AIA also commenced with effect from 1 November 2019.
The key life insurance entity of CommInsure Life, Colonial Mutual Life Assurance Society Ltd, instigated reinsurance arrangements, expected to cause a distribution to CBA in the first half of FY20.
CBA’s agreement with AIA is a stepping move in CommInsure Life’s revised transaction path divestment.
To Know about the company’s Financial Performance click here
Stock Performance of Commonwealth Bank of Australia
CBA traded higher and settled at $79.260 on ASX on 9 December 2019, up by 0.34 per cent from its previous close. The company has approximately $139.83 billion of market cap and 1.77 billion outstanding shares. The stock has generated 11.3 per cent on year to date basis.
Webster Limited (ASX: WBA)
Webster Limited is a leading Agribusiness company with a diverse history spanning over 180 years. The Company is involved in a range of activities and focussed on three main business activities i.e. Walnut, Agriculture and Water.
Change in Substantial Holding
On 8 November 2019, the company declared to change the substantial holding of Christopher Darcy Corrigan and Belfort Investment Advisors Limited. The present interest of Belfort includes 21,272,722 Webster Ordinary shares, and Belfort Potter Nominees Limited have 24,501,656 Webster Ordinary Shares.
Financial performance for FY 2019
For the period ending 30 September 2019
- WBA’s total revenue from ordinary activities decreased by 25.7 per cent to $153.9 million compared to the previous corresponding year.
- The Net loss attributable to the members of the company decreased by 133.6 per cent to $9.1 million.
- The company reported net profit before tax of $2.1 million, slightly ahead of guidance.
- The net tangible assets per security decreased to 74 cents compared to 86 cents in the previous year.
- The Agriculture division of Webster Limited reported a profit of $3.8 million.
- The company’s Board declared no final ordinary dividend for the financial year ended 30 September 2019.
WBA enters into agreement with PSP Investments
On 3 October 2019, the company announced that it has entered into a binding Scheme Implementation Agreement (SIA) with PSP BidCo and Sooke Investments Inc.
Under the agreement, it is proposed that PSP BidCo will acquire all the ordinary shares in Webster that PSP Investments does not already own, for a cash price of $2.00 per Webster share by way of a Court-approved scheme of arrangement (SIA).
- The agreement will provide the company’s shareholders with accelerated value and greater certainty.
- Via a separate SIA, the preference stakeholders will be presented with $2 per preference share.
- Maurice Felizzi and David Cushing (non-conflicted Directors of WBA) will unanimously suggest WBA’s shareholders to vote in favour of the schemes.
- The Scheme consideration represents 57 per cent premium on $1.27, 60 per cent premium to the 30-day volume-weighted average price (VWAP) on $1.25 and 47 per cent premium to $1.36.
- The agreement is likely to be executed in the first quarter of 2020.
Stock Performance of Webster Limited
WBA last traded lower at $1.970 on ASX on 9 December 2019, down by 0.5 per cent from its previous close. The company has approximately a market cap of $717.25 million and 362.25 million outstanding shares. The stock has generated a positive return of 38.46 per cent in the last six months and 24.53 per cent on a year to date basis.
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