Bank Shares
Bank shares have been among my most con- stant recommendations and the results published in the last few days well exceed market expecta- tions. As everyone knows, banks arc not required to disclose real profits and it is generally sup- posed that the published profit figures represent no more than about half their real earnings. This year the banks, with one exception, have added to the great profit mystery by producing their 1965 figures on the new tax basis (assum- ing a 40 per cent corporation tax), but without adjusting the 1964 profits to a comparable basis. The result has been to inflate the rise in profits and pull more wool over the eyes of their share- holders. This is really deplorable. LLOYDS is the only bank which has attempted to give com- parable figures, which suggest that their 1965 profits have advanced by nearly 30 per cent. This is much nearer the truth than the fantastic 74 per cent increase reported by MARTINS, the 65 per cent of BARCLAYS, the 66 per cent of the MIDLAND, the 61 per cent of NATIONAL PROVIN- CIAL and the 77 per cent of WESTMINSTER. Although the bank dividends have been raised in accordance with their forecasts and the divi- dend yields now obtainable range from 4.3 per cent on Barclays to 4.7 per cent on National Provincial, the shares opened lower this week on profit-taking—with the exception of Westminster 'B which rose Is. because the dividend was raised unexpectedly from an effective 12.4 per cent to 15 per cent.
Previous page
