This is wat the Flux.
I'm Brett justin Ads Monday, the nineteenth of August.
Dozzy boy, isn't it the famous saying families who eat pizza together stay together?
Exactly?
Get this one. Domino's Pizza CEO Don Mage has just appointed his sister to become the new head of its Australian division. And while this may seem like a call from a left biel juzzy boy, she's actually worked as a pizza maker at Dominoes and has even owned fourteen domino stores.
Keeping it in the family Fox fam As it hits the middle of the month, this is the time to be checking your credit score to see whether it's improved, whether it's gone down, and also the reasons behind all the changes. We've got it all covered in the Flux app in our credit score tool. To make sure you gamload the app and check it out.
This month, three glass half full stories today, Dozzy boy, let's do it for our first. Nab has announced a one point seventy five billion dollar cash profit for the past three months, but it's facing a pesky problem from its custom It.
Looks like Nab isn't quite more than money right now. Be man, so tell me more, all right.
So NAB is the second biggest of the big four banks based on its market value.
And NAB really hangs its hat on being the largest in the business banking space.
But Josieboit NAB released its third quarter results late last week and there was a little bit of cause for concern.
Yeah well, it earned one point seventy five billion bakkarnies in cash profit for the quarter. This was almost an eight percent de client compared to the same time last year.
One point seven five billion dollars in profit and they're still sweating. Must be more than just a bad day at the old bank tell window. Yeah, well, they saw their expenses rise slightly, but the biggest cost for NAB was a big jump in its credit impairment.
Meaning customers not paying back their loans now.
Joseboit NAB warned its investors of an impairment charge of one hundred and eighteen million bucks just for the first half.
And supposedly that's because of its customers facing cost of living struggles.
So now NAB needs to try continue growing its loan book.
Well, at the same time, they've got to make sure their customers don't default and leave them holding a bag full of bad loans.
M So what is the key learning here.
Asset quality is the fancy banking term for the overall risk associated with a bank's loan portfolio.
Yep. High asset quality means that a bank is lending to customers with a high likelihood of paying them back. No IOUs or dodgy checks.
But be manned. For a bank, it's relatively easy if to boost its loan book by lending to customers with lower credit worthiness, but doi boy.
This can result in pretty significant losses down the track if those customers struggle to repay.
The challenge for banks like NAB is to grow their lending but also ensure that they only issue loans to customers who were likely to repay them.
And Dazi boy, NAB not only sees a one hundred and eighteen million dollar impairment charge.
Oh no, no, They've also allowed for more than three hundred and sixty million bucks in impairment charges in the future.
So NAB's big challenge is growing its loan book while also maintaining high asset quality.
For our second story, Origin Energy has announced a record annual profit, but it shares had a bit of a blackout with a ten percent dip after some major red flags for the upcoming year.
Nothing like putting in a ten out of ten performance and then blowing the fuse at the finish line. Juzzy boy, blackout alert, tell me more.
Origin Energy is the largest energy retailer in Australia. We're talking over four point two million customers and late last year Origin was in the news almost more than Barbenheimer. That was after they rejected a twenty billion dollar takeover offer. But ben Man, while everyone has focused on the drama, Origin was quite literally raking in the killer watts.
They announced an underlying profit of one point one eight billion dollars for the last financial year. That all sounds quite good. What is the red flag?
Well, Origin is expecting that their energy markets business will drop in revenue, and not.
Just a little piddly drop. We're talking somewhere between sixteen percent and thirty four percent, quite specific.
And what is the reason for this big drop?
Well, juzzy boy, the first thing that comes to mind, I'm talking and increasing coal costs.
Also decrease in revenue from households and businesses. Good news for consumers, not so good for Origin investors.
Throw on top of that, it's a dividend of twenty seven and a half cents per share, which actually underwhelmed its investors. Next minute, Origin shares drop ten percent. Oh boy, So what is the key learning here?
The art of dividend policy is a very delicate dance.
If a company is too generous, it can short circuit its future growth.
But if a company's too stingy, it may risk losing investor loyalty.
Now, for context, Jasi Boy, a company's dividend policy determines how much profit it will return to shareholders in the form of this dividend.
Now, last year, Origin paid twenty cents per share to its shareholders.
And this year it's dividend jumped up to twenty seven and a half cents per share.
But this increase wasn't quite enough to satisfy some shareholders who were hoping for even higher returns.
For Origin, the challenge is how to continue rewarding investors while also navigating this transition to renewable energy, which will require a significant investment. For our third and final story, Paramount Globals shares jumped seven percent late last week as a surprise new entrant prepares a counter offer for this media giant.
A hot new bombshell enter. Who's the villa? So what's going on here? Be Man?
Well, Josy Boy. Paramount is the American film studio and TV company that's obviously one of Hollywood's oldest.
It's the name behind Titanic, the Transformer series, Shrek, you can't forget that one, and Mission Impossible as well.
Now, last month, after a lot of back and forth and back and forth, Paramount agreed to merge with Skydance Media in a whopping twenty eight billion US dollar deal.
But be Man, before they signed these nuptials, they agreed to a forty five day period where other bidders could submit a competing offer.
And now Josy Boy Low and or behold, another party has entered the mix and is expected to put in a competing bid to buy Paramount.
Plot twist, uhha.
This mystery person is Edgar Bronfman Junior. He's actually the ex CEO and chair of Warner Music Group, and this news sent Paramount share price up seven percent and Josie Boy to get the deal over the line. Bronfman's framing his deal as being a better offer for Paramount's current shareholders. And why is that Well, largely because his offer won't dilute the holdings of those current shareholders as much as the sky Dance offer.
So what is the key landing here?
Shared dilution happens when a company issues new stock which reduces the percentage owned by current shareholders.
And then man dilution can happen for a lot of reasons, including during mergers and acquisitions.
Yeap, new shares can be issued to fund the merger or the acquisition.
In Paramount's case, it's agreed that Skydance would invest eight billion US dollars into Paramount, but then merge the two company shares together.
Which would mean existing shareholders would have their ownership stake reduced.
And not all shareholders were too thrilled about this deal.
But if mister Bronckman goes ahead with this bid, it's expected that he will offer current shareholders some more ownership.
Which could leave sky Dance in the dust. Oh boy, Foxams, did you know? Sixty six percent of Australians do not know their credit score and that's why in the Flux Credit Score tool, you can get access to your score each and every month to see what went up, what went down and how you can improve your score for the future. Make sure you download the app and check out your score this month.
Thanks for listening and we'll see you on Wednesday.