Cashing in on Bank Profits

This is reporting week for the banks and there’s no time like an election to be tabling your results to become a whipping post.

Now, a year into COVID the banks are reversing their write-downs and provisions triggered by the pandemic which is boosting profit levels.

So…where do all those bank profits go? Well first of all, they are taxed at a healthy rate so government gets a bigger share than anyone. Second, dividends are declared and passed along to shareholders like pension funds, mutual funds and individuals saving for retirement or, for stock held outside a registered account, they are taxed again in the hands of the shareholder. Again, government gets more.

Still, it is more fun to complain banks make too much so…rather than earning half a point of interest with a deposit in a bank buy stock and receive about 4 or 5% in dividends – 10 times as much – by being an owner. Yesterday the Prime Minister said he wants to grab more with a new tax….the rest of us should beat him to it.