CBA’s $10b cha-ching!

Hey Superheroes,

After some big results from Wall Street giants over the past couple of weeks, it’s now time to put our homegrown counterparts under the spotlight.

Murdoch’s News Corp suffered a 75% profit blow (ouch!), while furniture retailer Nick Scali just reported a profit surge of over 26% on the prior year. No couch potatoes in that head office.

Let’s dig in.

CommBank cashes in on rising rates

CBA set a new record this week, unveiling a jaw-dropping $10 billion profit.

A strong profit from Australia’s 2nd largest company helps buoy the ASX 200 index. (The bank commands an impressive 7% slice of the pie.)

It also bodes well for the Big 4 banks in general, which together, make up 17% of the total index. Now, if you’ve got skin in the ETF game, this is more than just a blip on the radar.

🍝 CBA’s secret sauce?

Because interest rates have risen so sharply, it’s paved the way for the big banks to widen margins on loan offerings.

But while CommBank may be savouring fatter margins, it’s bracing for a curveball…a surge in loan defaults.

According to its financial statements, CommBank’s provision for bad debts has increased significantly since FY23. Now, analysts are calling out some long-term headwinds for its mortgage business.

👉 The bottom line?

In recent years, the nation’s wealth see-saw has tilted hard in favour of older generations, making younger people poorer and less likely to take out home loans in the future.

Basically, cash- and asset-flush boomers are benefiting from the same environment that’s hitting zoomers hard as interest rates and prices rise faster than wages.

Mickey adds some ad revenue magic

Disney raised prices across its big streaming channels Disney+ and Hulu (by up to 27%) this week and closed up almost 5% overnight. Because its costs are increasing and, because…it can. After all, everyone else is doing it.

With its content budget ballooning to around US$30 billion, it should be in a position to win and keep customers with must-see content, like restaurant drama The Bear (and its eye candy) and Only Murders in the Building.

📺 What else is at play?

As audiences continue to shift away from commercial broadcast TV towards online streaming, the opportunity for Disney to seize ad revenue was too juicy to pass up.

The streamer is expecting these ad-free plan fee hikes to drive price-sensitive users down to its ad-supported tier, instead of people unsubscribing altogether.

With more eyes on ads, we can expect Disney’s ad revenue to grow despite headwinds for subscriber revenue as consumers’ cost of living continues to bite.

Netflix put up its prices by around 10% last year and led the charge on password sharing to boost its margins—something Disney CEO Bob Iger has his eye on, too.

🔦 Some other things we’re shining the Spotlight on:

• WEIGHT OF THE WORLD: Celebrity endorsements and TikToks have helped propel Novo Nordisk (Europe’s 2nd most valuable company that owns the famed weight loss drug Ozempic). So much so, the drugmaker is struggling to keep up with demand.
• LIFE IN PLASTIC, IT’S FANTASTIC: Tupperware Brands has been in 5th place (just behind Amazon) on Superhero’s top-traded Wall Street stocks list for the past two weeks with Millennials making up 2 in 3 investors trading the stock. Is TUP following in Bed, Bath & Beyond’s footsteps to become the next meme stock?
• SHOPPING & DROPPING: It seems the rich really are getting richer. Cettire saw its stock surge by 12% yesterday following some news from CEO Dean Mintz, who called out sustained luxury shopper spending into the new financial year. Question is, why did he sell an almost 9% stake in the biz earlier today?

📊 Upcoming ASX reports due:

• Next week’s another big one! Bendigo and Adelaide Bank, Carsales, Treasury Wine Estates, Ansell, Transurban, Telstra, Seven West Media, Temple & Webster, ASX (the company), Mirvac and Allkem are all due to report earnings.

That wraps up another weekly Spotlight.

Thanks to all of you for being here and reading!