sun has set on the golden age of banks , page-3

Great post as always Camden. For me, I'm avoiding banks for two main reasons, both of which you discuss. First, my proxy for the health of the global banking sector is the number of US bank failures. If you check out this US govt link (http://www.fdic.gov/bank/individual/failed/banklist.html) you can see that 24 banks failed in the years 2000-2007. For the years 2008, 2009 and 2010, the number of US banks failing were 25, 140 and 146 respectively. Looking at the monthly stats across 2010 the failures are still relatively consistent so I don't think we are close to coming to end of tight bank financing.

Second, Camden mentions that the banks' profitability metrics are distinctly average. So many people just see the fact that banks are announcing records profits, but the question as investors you should be asking is not how much are the banks earning but how much SHOULD they be earning. If you look at Camden's numbers, the answer is a bit more than the record profits they are making now. On most profitability measures, the Aus banks are actually behind their US counterparts despite their competitive advantages here.

As an armchair investor, its easy to just look at the dividends and record profits and think the banks are having it easy. My gut feel though is that the banks are doing pretty average and that there are a few bank financing chickens that haven't yet come home to roost.