This is a significant negative for the banks, in my view. It will be expensive, distracting and unpredictable, and the recommendations and government response could end up being material, especially if we have a Labor Government by then (which seems likely).
The banks have been wonderful for shareholders and have high levels of customer satisfaction, but the truth is that all this terrible politics is happening because the big four banks are unpopular and there is a perception that they are a cartel making too much money.
They have always been able to use mortgage repricing to offset regulatory difficulties such as higher capital requirements and the bank levy, but this is likely to become more difficult in future.
For most investors in the banks, the key question is: “are the dividends safe?” And the answer probably is Yes. But capital growth is going to become more challenging in a post Royal Commission world.
That is especially true if there is a change of government and Labor comes in with policies like limiting negative gearing, reducing the capital gains tax discount, limiting family trusts and perhaps even increasing personal income tax.
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