K62 Finance

Commodities up but $A stuck at US77c

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Original article by Jens Meyer
The Australian Financial Review – Page: 27 : 1-Nov-16

The rally in the price of coking and thermal coal since early August 2016 has bolstered Australia’s terms of trade. However, the Australian dollar has been largely range-bound over this period, and it has not been able to achieve a sustained rise above the $US0.77 level. The currency has not benefited from growing expectations that the Reserve Bank will leave official interest rates on hold in the near-term. Sean Callow of Westpac expects the currency to test the $US0.70 level by the December 2017 quarter.

CORPORATES
RESERVE BANK OF AUSTRALIA, WESTPAC BANKING CORPORATION – ASX WBC, UNITED STATES. FEDERAL RESERVE BOARD, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, RESERVE BANK OF NEW ZEALAND

Dividend cuts loom despite $23bn profits

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Original article by Michael Bennet
The Australian – Page: 17 & 21 : 24-Oct-16

National Australia Bank is tipped to post a 2015-16 cash profit of $A6.55bn on 27 October 2016. The ANZ Bank and Westpac are expected to post full-year profits of $A6.18bn and $A7.8bn respectively in coming weeks, while the Commonwealth Bank has booked a cash profit of $A9.45bn for the year to 30 June. Bank dividends are likely to come under pressure, while Jonathan Mott of UBS expects the banks to post negative growth in earnings per share for the first time since the global financial crisis.

CORPORATES
NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, WESTPAC BANKING CORPORATION – ASX WBC, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, UBS HOLDINGS PTY LTD, CITIGROUP PTY LTD, CLSA AUSTRALIA PTY LTD, GOLDMAN SACHS AND PARTNERS AUSTRALIA PTY LTD, MACQUARIE GROUP LIMITED – ASX MQG, RESERVE BANK OF AUSTRALIA, CLYDESDALE BANK PLC, STANDARD AND POOR’S ASX 200 BANKS INDEX, DEUTSCHE BANK AG

Fewer home loans a good thing: APRA

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Original article by Joanna Mather
The Australian Financial Review – Page: 23 : 21-Oct-16

Australian Prudential Regulation Authority chairman Wayne Byres has told a Senate estimates committee that lending standards in the housing finance sector have improved over the last year. He added that APRA’s move to impose stricter lending standards on the industry has also resulted in slower growth in lending to property investors and to marginal borrowers. Treasury secretary John Fraser previously expressed concern about the cost of housing in Australia when he fronted the committee.

CORPORATES
AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY, AUSTRALIA. DEPT OF THE TREASURY

Mortgage price war ‘will hurt dividend’

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Original article by Michael Bennet
The Australian – Page: 23 : 20-Oct-16

Scott Manning of JP Morgan says stricter capital requirements and a rise in the customer churn rate contributed to a decline in the four major banks’ return on equity from mortgages between 2010 and 2015. He adds that the return from banks’ non-mortgage products fell to the same level as their cost of capital during this period. Manning warns that banks’ dividends will be vulnerable if the return on equity from mortgages falls any further, and he argues that banks should be offering tailored mortgage interest rates that reflect each borrower’s risk profile.

CORPORATES
JP MORGAN AUSTRALIA LIMITED, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, WESTPAC BANKING CORPORATION – ASX WBC, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, DIGITAL FINANCE ANALYTICS, BANK OF QUEENSLAND LIMITED – ASX BOQ

$A heading to heights of US90c

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Original article by Aaron Patrick
The Australian Financial Review – Page: 27 : 19-Oct-16

Jason Thomas of The Carlyle Group is bullish about the outlook for the Australian dollar. The director of research forecasts that the US dollar will fall by 8-15 per cent over the next five years, as US interest rates are unlikely to rise as quickly as anticipated. Thomas says this in turn will boost the value of the Australian dollar, which could rise to around $US0.85 over the next five years. He adds that the currency could potentially test the $US0.90 level.

CORPORATES
THE CARLYLE GROUP, UNITED STATES. FEDERAL RESERVE BOARD, RESERVE BANK OF AUSTRALIA, FEDERAL RESERVE BANK OF CHICAGO, STANDARD AND POOR’S 500 INDEX

Australia raises $7.6b in first 30-year bond

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Original article by Vesna Poljak
The Australian Financial Review – Page: 20 : 13-Oct-16

The inaugural issuance of 30-year Australian government bonds attracted more than $A13bn worth of bids from prospective investors. The offer was capped at $A7.6bn, and the yield on the long-dated bonds will be 3.27 per cent. This is significantly higher than equivalent bonds in the US, the UK and Japan, while financial market watchers had anticipated a yield of between 3.21 per cent and 3.28 per cent. Demand for the 30-year bonds and the limited supply is likely to result in strong activity in the aftermarket.

CORPORATES
AUSTRALIA. DEPT OF THE TREASURY. OFFICE OF FINANCIAL MANAGEMENT, QIC LIMITED, JP MORGAN AUSTRALIA LIMITED, BANK OF JAPAN, EUROPEAN CENTRAL BANK

Livingstone named CBA chair as Turner departs

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Original article by Richard Gluyas
The Australian – Page: 21 : 13-Oct-16

The Commonwealth Bank has advised that Catherine Livingstone will succeed David Turner as the bank’s chair in early 2017. Livingstone has praised Turner’s contribution as chairman, which he has held since 2010. Brian Johnson of CLSA notes that the bank has outperformed during Turner’s time in the role, but adds that it has underperformed in 2016. He also says Livingstone’s biggest challenge is likely to be finding an eventual successor to CEO Ian Narev.

CORPORATES
COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, CLSA AUSTRALIA PTY LTD, TELSTRA CORPORATION LIMITED – ASX TLS, MACQUARIE GROUP LIMITED – ASX MQG, COCHLEAR LIMITED – ASX COH, WESTPAC BANKING CORPORATION – ASX WBC, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB

Investors embrace maiden 30-year government bond

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Original article by Jonathan Shapiro
The Australian Financial Review – Page: 1 & 8 : 12-Oct-16

There has been strong demand among international investors for the inaugural issuance of 30-year Australian government bonds. The bonds will mature in March 2047 and investors will receive a rate of 3.25 per cent. The yield on 10-year bonds is currently around 2.25 per cent. The volume and pricing of the 30-year bonds will be determined on 12 October 2016, but the issuance is believed to have attracted around $A7.5bn worth of bids from prospective investors.

CORPORATES
AUSTRALIA. DEPT OF THE TREASURY. OFFICE OF FINANCIAL MANAGEMENT, JAMIESONCOOTEBONDS PTY LTD, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, RESERVE BANK OF AUSTRALIA

Wrinkles in CBA’s satisfaction crown

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Original article by Vesna Poljak
The Australian Financial Review – Page: 23 : 6-Oct-16

Roy Morgan Research’s latest survey of customer bank satisfaction shows that the Commonwealth Bank of Australia (CBA) ranked first in retail main financial institution customer satisfaction for the six months to August 2016. Customers were less satisfied with CBA’s mortgage products, with CBA ranking third out of the big four banks. CBA dominates Australia’s mortgage market, with a 25.3 per cent market share.

CORPORATES
COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, WESTPAC BANKING CORPORATION – ASX WBC, ROY MORGAN RESEARCH LIMITED, AUSTRALIAN LABOR PARTY

Rates low enough to spur growth: RBA

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Original article by David Rogers
The Australian – Page: 28 : 5-Oct-16

Financial markets have priced in a 20 per cent chance that the Reserve Bank of Australia will reduce the cash rate in November 2016. The central bank left official interest rates on hold at 1.5 per cent on 4 October, and governor Philip Lowe said the board decided that the cash rate is at an appropriate level to deliver sustainable economic growth and meet the bank’s inflation target over the long-term. Lowe’s statement notably made no reference to the upcoming release of inflation data.

CORPORATES
RESERVE BANK OF AUSTRALIA, WESTPAC BANKING CORPORATION – ASX WBC, CORELOGIC AUSTRALIA PTY LTD, JP MORGAN AUSTRALIA LIMITED