K62 Finance

CBA cuts discounts to boost margins

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Original article by Richard Gluyas
The Australian – Page: 19 & 22 : 23-Aug-16

The Commonwealth Bank has advised mortgage brokers that the discount on some of its mortgage loan applications for owner-occupiers and investors will be reduced by 15 basis points. It has also cut the discount on several other mortgage products by eight basis points. The move has been attributed to factors such as the rising cost of funding and new capital requirements. Australia’s major banks recently attracted criticism for withholding most of the 25 basis point reduction in the cash rate.

CORPORATES
COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, RESERVE BANK OF AUSTRALIA, AUSTRALIA. DEPT OF THE PRIME MINISTER AND CABINET, AUSTRALIAN LABOR PARTY

Big four banks sued by US funds over BBSW

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Original article by James Eyers
The Australian Financial Review – Page: 3 : 19-Aug-16

A class action launched in the US may complicate the Australian Securities & Investments Commission’s litigation against three of Australia’s big four banks. The litigants, including a derivatives trader and two hedge funds, allege in documents filed in a New York court that they suffered losses because the four major banks and Macquarie Group manipulated the bank bill swap rate. The US litigation makes a settlement between ASIC and the ANZ Bank, Westpac and National Australia Bank rather unlikely.

CORPORATES
AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, FEDERAL COURT OF AUSTRALIA, AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION, WESTPAC BANKING CORPORATION – ASX WBC, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, MACQUARIE GROUP LIMITED – ASX MQG, AUSTRALIAN LABOR PARTY, DISTRICT COURT OF UNITED STATES. SOUTHERN DISTRICT OF NEW YORK, SONTERRA CAPITAL MASTER FUND, FRONTPOINT FINANCIAL SERVICES, MAURICE BLACKBURN PTY LTD, BANK OF NEW ZEALAND, BNP PARIBAS SA, CITIBANK CORPORATION, CREDIT SUISSE AG, DEUTSCHE BANK AG, HSBC HOLDINGS PLC, JP MORGAN CHASE AND COMPANY, ROYAL BANK OF CANADA, ROYAL BANK OF SCOTLAND GROUP PLC, UC HOLDINGS, ICAP PLC, TULLETT PREBON, MORGAN STANLEY AND COMPANY INCORPORATED, LLOYD’S OF LONDON

Big four the cheapest in 20 years, says Regal

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Original article by Vesna Poljak
The Australian Financial Review – Page: 17 : 17-Aug-16

Regal Funds Management’s Julian Babarczy says Australia’s four major banks offer good value at present, noting that their valuations are at or near their lowest in the last two decades. Meanwhile, Babarczy says the banks’ capital ratios and credit quality are sufficient at present so they do not need to undertake capital raisings. The proceeds of the ANZ Bank’s $A1bn hybrid securities issuance will be treated as additional tier-1 capital rather than common equity tier-1 capital.

CORPORATES
REGAL FUNDS MANAGEMENT PTY LTD, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, NIKKO ASSET MANAGEMENT GROUP

CBA chief’s $12.3m pay bonanza

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Original article by Michael Roddan, Ben Butler
The Australian – Page: 21 & 25 : 16-Aug-16

Commonwealth Bank executives were collectively paid a total of $A44.8m in 2015-16. This includes the $A12.3m remuneration of CEO Ian Narev, which was 50 per cent higher than previously. However, the banking major notes that this includes equity awards that were granted over the previous four years and vested during the financial year. Narev’s remuneration rose by 5.4 per cent to $A8.77m on a statutory basis. The bank recently posted a cash profit of $A9.45bn for 2015-16.

CORPORATES
COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, AUSTRALIAN LABOR PARTY, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, WESTPAC BANKING CORPORATION – ASX WBC, MACQUARIE GROUP LIMITED – ASX MQG, RESERVE BANK OF AUSTRALIA, AUSTRALIA. DEPT OF THE PRIME MINISTER AND CABINET

CBA to drive returns as results soften

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Original article by Michael Bennet
The Australian – Page: 21 & 25 : 11-Aug-16

The Commonwealth Bank of Australia has posted a 2015-16 cash profit of $A9.45bn. Despite being a record result, it was just three per cent higher than previously, due to a disappointing performance across the group’s key businesses in the second half. CBA’s return on equity fell to 16.5 per cent and its net interest margin fell to 2.07 per cent. CEO Ian Narev says banks must take into account the needs of borrowers, savers and shareholders with regard to setting interest rates. Shareholders will receive a full-year dividend of $A4.20 per share.

CORPORATES
COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, WESTPAC BANKING CORPORATION – ASX WBC, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, WAVESTONE CAPITAL PTY LTD, RESERVE BANK OF AUSTRALIA, UBS HOLDINGS PTY LTD, WATERMARK FUNDS MANAGEMENT PTY LTD, BELL POTTER SECURITIES LIMITED

Elliott steadies the ship at ANZ

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Original article by Michael Bennet
The Australian – Page: 21 & 25 : 10-Aug-16

The ANZ Bank has posted a cash profit of $A5.2bn for the nine months to 30 June 2016, which is three per cent lower than previously. ANZ’s earnings for the June 2016 quarter were below expectations at around $A1.7bn, while bad debt charges rose to $A482m during the quarter. Meanwhile, CEO Shayne Elliott has defended the banks’ decision to pass on only part of the 25 basis point reduction in the cash rate to home loan customers and increase the interest rates on some term deposits.

CORPORATES
AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, RESERVE BANK OF AUSTRALIA, BENDIGO AND ADELAIDE BANK LIMITED – ASX BEN, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, UBS HOLDINGS PTY LTD, MACQUARIE GROUP LIMITED – ASX MQG

Cutting rates to get the $A lower brings risks to the economy

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Original article by Philip Baker
The Australian Financial Review – Page: 28 : 10-Aug-16

The Australian dollar has risen above $US0.76 since the Reserve Bank reduced the cash rate to a record low of 1.5 per cent on 2 August 2016. The currency has benefited from the fact that the local cash rate is still quite high relative to many countries, so further money policy easing may be necessary in order to put sustained downward pressure on the dollar. However, this strategy has economic risks, such as the potential to undermine consumer confidence. Indeed, the ANZ/Roy Morgan consumer confidence rating fell by 2.8 per cent to 114.7 in the first week of August.

CORPORATES
RESERVE BANK OF AUSTRALIA, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, ROY MORGAN RESEARCH LIMITED, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, TD SECURITIES, UNITED STATES. FEDERAL RESERVE BOARD, BANK OF JAPAN, ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT

CBA to hand down bumper $9.5bn profit

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Original article by Michael Bennet
The Australian – Page: 21 & 24 : 8-Aug-16

Bendigo and Adelaide Bank is tipped to post a 2015-16 cash profit of $A434m on 8 August 2016, while the Commonwealth Bank of Australia is expected to report a full-year profit of $A9.5bn on 10 August. Scott Manning of JP Morgan says margins are likely to remain a significant focus for the banking major. However, the Reserve Bank does not expect banks’ margins to be adversely affected by recent moves to lift some term deposit interest rates while failing to pass on the full reduction in the cash rate to home loan and business customers.

CORPORATES
COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, BENDIGO AND ADELAIDE BANK LIMITED – ASX BEN, JP MORGAN AUSTRALIA LIMITED, RESERVE BANK OF AUSTRALIA, MORGAN STANLEY AUSTRALIA LIMITED, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, WESTPAC BANKING CORPORATION – ASX WBC, AUSTRALIA. DEPT OF THE PRIME MINISTER AND CABINET, MERLON CAPITAL PARTNERS PTY LTD, MORGANS FINANCIAL LIMITED, PEABODY ENERGY CORPORATION, UBS HOLDINGS PTY LTD, CITIGROUP PTY LTD, FIRST OIL PLC

Cash still good option for savers, say advisers

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Original article by Sally Patten
The Australian Financial Review – Page: 6 : 5-Aug-16

Australian savers who may need to access their money at short notice are advised to opt for cash deposits. According to comparison website Canstar, the average interest rate on the major banks’ six-month deposits has declined to 2.11 per cent, from 5.44 per cent in 2010. Those seeking higher returns should consider investing in corporate bonds and hybrid securities. Scott Farmer, of Bravium Financial Planning, says the rates of return in these two asset classes range from four per cent to 6.5 per cent.

CORPORATES
CANSTAR PTY LTD, AFFINITY PRIVATE PTY LTD, BRAVIUM FINANCIALPLANNING, HEWISON PRIVATE WEALTH

CEOs warn: bashing banks a growth risk

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Original article by Phillip Coorey, James Eyers
The Australian Financial Review – Page: 1 & 6 : 5-Aug-16

Prime Minister Malcolm Turnbull and Treasurer Scott Morrison have been asked to refrain from criticising the banks. Westpac CEO Brian Hartzer said on 4 August 2016 that their criticism is unwarranted. He stated that the banks could not pass on the recent official interest rate cut in full because of the necessity to balance the interests of borrowers with the need for prudent management of their funding needs. Turnbull reminded the banks that they have an obligation to act in socially responsible ways.

CORPORATES
AUSTRALIA. DEPT OF THE PRIME MINISTER AND CABINET, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, WESTPAC BANKING CORPORATION – ASX WBC, AUSTRALIA. DEPT OF THE TREASURY, AUSTRALIAN BANKERS’ ASSOCIATION, RESERVE BANK OF AUSTRALIA, AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY