Commonwealth Securities Is on A Roll: What You Need to Know

  • Oct 05, 2018 AEST
  • Team Kalkine
Commonwealth Securities Is on A Roll: What You Need to Know

CommSec or Commonwealth Securities was retained by the Commonwealth Bank of Australia (ASX: CBA). The financial results for FY 2018 of CommSec have witnessed a strong momentum and were helped by the strengthening fundamentals of the company. For the year ended June 30, 2018, the company’s profits stood at $114.2 million which reflects the growth of 13% on the YoY basis. The company’s top line number was supported by the commission as well as brokerage revenues, the primary drivers of revenues for any broking company. The company’s revenues stood at $232.5 million in FY 2018 while in the year-ago period it was $211.4 million.

However, the company did witness a rise in the expenses as well. It’s transaction services expenses and management fees were at elevated levels. The market volatility is very crucial for the revenues of the broking companies. Higher the volatility, higher will be the revenues as the broking clients would increase their trading activities which would help in boosting the revenues. Moreover, ease of trading with the help of the digital tools might also improve the trading volumes of the broking companies. 

CBA has been benefiting primarily because of the increased use of the digital modes for carrying out transactions. The trading activities with the help of digital modes streamline the process and thus, execution can be done much faster. Moreover, the broking clients need not worry about the fraudulent transactions as they are extremely safe. Commonwealth Bank of Australia’s business and its private banking division including CommSec have seen unloading its several of the wealth businesses which have come under the spotlight of the Hayne Royal Commission as well as other regulators. The misleading and false behavior with the customers has prompted regulators.

At the time of writing, Commonwealth Bank of Australia was trading at A$70.080 and has the market capitalization of $123.78 billion.

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