Another big profit today from a member of the banking cartel. St George earned $416 million in the first half of 2005, and is rewarding shareholders with a higher dividend. That’s around $2.2 million every day of the six months to 31 March, another example of just how profitable our banks have become.

Shareholders will be paid a higher dividend of 67c a share, but with earnings per share of $1.78 the payout ratio is less than 50%, which is low compared with other members of the cartel. Cost to income ratio is now 44c in the dollar, which is among the best in the country, while the return on equity was 22%, again an industry high.

No sign of any cut in fees and charges, which it could do quite easily without compromising any of its credit ratings, although the big brokers and their fund manager mates would not be happy. But St George remains the object of speculation not for the size of its profits but for the “will she or won’t she” speculation about CEO Gail Kelly. She may have re-signed with the bank late last week as CEO but that talk won’t go away that she’s headed for the CBA when her old boss, David Murray quits mid way through next year.

Peter Fray

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