billions of dollars in profits is meaningless without context. The margins is what matters. A supermarket with 1 billion in revenue but 900m profit would be excessive would be a 90% net margin. But a supermarket with 100bn revenue and 3 billion profit is not. That’s 3% net margins. These are basic financial concepts you don’t seek to grasp. The reason no supermarket earns 90% net margins is COMPETITION!!! Excessive margins bring in competition and eventually sorts itself out to an equilibrium.
Bank margins are also small…. CBA has the highest $ profit simply because it lends more. Ironically if the financially illiterate socialists had their way and broke up the banks into lots of smaller banks you’d find the cost of your mortgage goes up regardless of RBA movements. Simply because funding costs go up due to risk (smaller size) and loss of economies of scale. But don’t let logic get in the way.
Youre financially illiterate I’m afraid. Thought that before. Even more so now.
COL Price at posting:
$19.82 Sentiment: Buy Disclosure: Held
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