K62 Finance

Dollar overvaluation won’t provoke rate cut, says NAB

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Original article by Jessica Sier, Mark Mulligan
The Australian Financial Review – Page: 26 : 27-Apr-16

The Australian dollar has risen by more than 12 per cent since mid-January 2016. National Australia Bank’s Rodrigo Catril says the currency may be approaching previous levels at which the Reserve Bank had expressed "discomfort". The central bank responded to these concerns by reducing the cash rate, but NAB does not believe that the dollar’s current level will be sufficiently high for the RBA to cut interest rates in May. The latest inflation and jobs data will also influence the RBA’s monetary policy decision.

CORPORATES
NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, RESERVE BANK OF AUSTRALIA, BLOOMBERG LP, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, OANDA AUSTRALIA PTY LTD, UNITED STATES. FEDERAL RESERVE BOARD

ANZ-Roy Morgan Australian Consumer Confidence Rebounds – up 3.8pts to 115.8

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Original article by Gary Morgan
Market Research Update – Page: Online : 19-Apr-16

The 3.8 points increase in Consumer Confidence to 115.8 today has been driven by improving sentiment towards the Australian economy, with 31% (up 3ppts) of Australians expecting "good times" for the Australian economy over the next 12 months and 34% (up 3ppts) of Australians expecting "good times" for the Australian economy over the next five years. In addition, a majority of Australians (53%, up 5ppts) say now is a "good time to buy" major household items. The increase is good news for the L-NP Government, however the latest Morgan Poll released yesterday shows the L-NP 50% (down 2.5%) cf. ALP 50% (up 2.5%) in mid-April and the Roy Morgan Government Confidence Rating has plunged to its lowest point since Malcolm Turnbull became Prime Minister – now at 99 (down 7pts). In addition, last week’s fall in the ABS unemployment rate sounds good but it is in fact misleading as the ABS consistently underestimates the real level of unemployment in the Australian economy – now at 11.0% (1,422,000) in March according to the latest Roy Morgan real unemployment estimates.

CORPORATES
ROY MORGAN RESEARCH LIMITED, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ

Bank bad debts to rise $1.2b, UBS downgrades earnings

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Original article by James Eyers
The Australian Financial Review – Page: 18 : 15-Apr-16

Australian banks’ exposure to corporate failures will affect their financial results when they are reported in early May 2016. Jonathan Mott, an analyst at UBS, wrote in a note to clients that total exposures to companies such as Arrium, the Wiggins Island Coal Export Terminal, Dick Smith, McAleese and Slater & Gordon would be around $A899 million for National Australia Bank, $A809 million for Westpac, $A688 million for the ANZ Bank and $A657 million for the Commonwealth Bank.

CORPORATES
NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, WESTPAC BANKING CORPORATION – ASX WBC, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, UBS HOLDINGS PTY LTD, DICK SMITH HOLDINGS LIMITED – ASX DSH, SLATER AND GORDON LIMITED – ASX SGH, ARRIUM LIMITED – ASX ARI, PEABODY COALTRADE AUSTRALIA PTY LTD, McALEESE LIMITED – ASX MCS

Bank royal commission a drain on economy: Hirst

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Original article by James Eyers
The Australian Financial Review – Page: 23 : 15-Apr-16

Bendigo & Adelaide Bank CEO Mike Hirst says there is no need for a royal commission into the banking industry. He told a strategy briefing in Sydney that a royal commission would be a waste of money as there is no evidence of systemic failure. He also said a royal commission would also have a negative impact on the economy. Hirst favours self-regulation, and he argues that the poor conduct of certain banking employees can be rectified by the banks themselves.

CORPORATES
BENDIGO AND ADELAIDE BANK LIMITED – ASX BEN, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, RESERVE BANK OF AUSTRALIA

The alternative to a Bank Commission – tackle Australia’s massive ‘cash economy’

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Original article by Gary Morgan
Market Research Update – Page: Online : 12-Apr-16

The cost and distraction of a Bank Royal Commission would be expensive and unnecessary. Banks have high customer satisfaction ratings. Today Australia needs the banks and other financial institutions to be more involved in helping businesses and their customers in difficult financial times. Much more important to the electorate is Australia’s massive real unemployment and under-employment – in March 11 per cent unemployed and 7.8 per cent under-employed . The situation will not improve with recent industry lay-offs. Many of Australia’s business failures have been caused by falling commodity prices and unrealistic work practices upheld by outdated industrial relations laws. With the lack of sufficient work many Australians see no alternative but to be part of the massive cash economy. Both sides of politics need to present to the electorate policies which tackle this problem – only then will State and Federal Governments have any hope of cutting the massive government deficit and collecting sufficient additional revenue needed for education, hospitals, roads, transport, etc.

CORPORATES
ROY MORGAN RESEARCH LIMITED, ARRIUM LIMITED – ASX ARI, WOOLWORTHS LIMITED – ASX WOW, MASTERS HOME IMPROVEMENT AUSTRALIA PTY LTD, DICK SMITH HOLDINGS LIMITED – ASX DSH, QUEENSLAND NICKEL PTY LTD

Consumer Confidence down for 4th week

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Original article by Gary Morgan
Market Research Update – Page: Online : 12-Apr-16

ANZ-Roy Morgan Consumer Confidence fell again this week – down for the fourth week in a row to 112.0 (down 4.4pts in a month). Driving this week’s fall was a deterioration of the index comparing personal financial situations to this time last year – with just 29 per cent (down 3ppts) of Australians saying they are "better off" financially than this time last year and now 26 per cent (up 3ppts) of Australians saying they are "worse off" financially. This week’s fall in ANZ-Roy Morgan Consumer Confidence coincided with last week’s poor economic news: iron ore miner and steel manufacturer Arrium possibly closing its Whyalla steel smelters and putting up to 10,000 jobs across Australia at risk; hundreds of truck drivers threatening a truck convoy to Canberra protesting against owner-drivers being put out of business by the previous Labor Government’s legislation favouring large trucking companies; and more poor publicity on banks and the financial industry resulting in Opposition Leader Bill Shorten promising a Bank Royal Commission if elected.

CORPORATES
ROY MORGAN RESEARCH LIMITED, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, ARRIUM LIMITED – ASX ARI, AUSTRALIAN LABOR PARTY, AUSTRALIA. DEPT OF THE PRIME MINISTER AND CABINET, AUSTRALIA. ROAD SAFETY REMUNERATION TRIBUNAL, AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION, AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY, RESERVE BANK OF AUSTRALIA

ANZ-Roy Morgan Australian Consumer Confidence on the skids – down 1.4pts to 112.0

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Original article by Roy Morgan Research
Market Research Update – Page: Online : 12-Apr-16

The ANZ-Roy Morgan Consumer Confidence rating for Australia fell 1.2 per cent to 112.0 in the week ended 10 April 2016, having fallen 2.6 per cent over the previous three weeks. While it is always difficult to pinpoint the driving forces behind confidence, it seems likely that the current discussions on policy reform ahead of the Federal Budget in May, as well as the recent weakness in equity markets, are affecting consumers’ confidence. Consumers’ views towards their current personal finances fell by 5.5 per cent, while consumers’ views towards the economic outlook in the next 12 months fell by two per cent.

CORPORATES
ROY MORGAN RESEARCH LIMITED, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ

Banks cheap on valuations, but ‘buy’ status questionable

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Original article by Vanessa Desloires
The Australian Financial Review – Page: 27 : 12-Apr-16

The share prices of Australia’s four major banks have fallen by 7-12 per cent in the last month. As a result, the banks are trading at a sizeable discount based on their forward price-to-earnings ratio, which has fallen to about 11 times. However, Omkar Joshi of Watermark Funds Management notes that the banks are still much more expensive than their international peers on a price-to-book ratio.

CORPORATES
WATERMARK FUNDS MANAGEMENT PTY LTD, DEUTSCHE BANK AG, BLOOMBERG LP, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, ARRIUM LIMITED – ASX ARI, AURORA FUNDS MANAGEMENT LIMITED, CONTANGO ASSET MANAGEMENT LIMITED, ESANDA FINANCE CORPORATION LIMITED, MACQUARIE GROUP LIMITED – ASX MQG, WESTPAC BANKING CORPORATION – ASX WBC, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB

BoQ lifts mortgage rates as profit jumps 11pc

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Original article by Richard Gluyas
The Australian – Page: 19 & 22 : 8-Apr-16

The Bank of Queensland has reported an 11 per cent rise in 2015-16 interim profit to $A171 million. CEO Jon Sutton says the bank’s variable interest rates for owner-occupier home loans will be raised by 12 basis points to 5.86 per cent. Mortgage rates on investor loans will rise by 25 basis points to 6.28 per cent. The new rates will take effect in mid-April 2016.

CORPORATES
BANK OF QUEENSLAND LIMITED – ASX BOQ, RESERVE BANK OF AUSTRALIA, MACQUARIE EQUITIES LIMITED, VIRGIN MONEY (AUSTRALIA) PTY LTD

Volatile equities to keep insurers’ dividends low

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Original article by Michael Rodman
The Australian – Page: 31 : 7-Apr-16

Income from their investment portfolios generates a significant proportion of Australian-listed insurance companies’ earnings. Andrew Adams of Credit Suisse says financial market volatility during the March 2016 quarter will in turn put downward pressure on their dividend payouts. Insurance Australia Group is likely to be hardest hit by the market volatility. Adams has scaled back his 2015-16 profit forecast for the group from $A920m to $A830m.

CORPORATES
CREDIT SUISSE (AUSTRALIA) LIMITED, INSURANCE AUSTRALIA GROUP LIMITED – ASX IAG, QBE INSURANCE GROUP LIMITED – ASX QBE, SUNCORP GROUP LIMITED – ASX SUN, STANDARD AND POOR’S ASX 200 ACCUMULATION INDEX