K62 Finance

Westpac misses the profit mark

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Original article by Michael Bennet
The Australian – Page: 19 & 23 : 3-May-16

Shares in Australia’s major banks were sold down on 2 May 2016, after Westpac posted lower-than-expected cash earnings of $A3.9bn for the first half of 2015-16. This was three per cent higher than previously, but impairment charges rose by 96 per cent to $A667m and the bank’s return on equity fell to 14.2 per cent. CEO Brian Hartzer says Westpac will cease offering financial products that do not generate a sufficient return. Shareholders will receive an unchanged interim dividend of $A0.94 per share.

CORPORATES
WESTPAC BANKING CORPORATION – ASX WBC, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, ARRIUM LIMITED – ASX ARI, SLATER AND GORDON LIMITED – ASX SGH, UBS HOLDINGS PTY LTD, BELL POTTER SECURITIES LIMITED, ARNHEM INVESTMENT MANAGEMENT PTY LTD

Pressure on dividends in bank earnings

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Original article by Clancy Yeates
The Australian Financial Review – Page: 13 & 16 : 2-May-16

The earnings and dividend payouts of Australia’s four major banks will come under scrutiny in the first week of May 2016, with three set to release their half-year results. Westpac is tipped to post an interim net profit of at least $A4bn, while the ANZ Bank and National Australia Bank are expected to report half-year profits of about $A3.58bn and $A3.34bn respectively. Hugh Dive of Aurora Funds Management says NAB is the most likely to reduce its dividend payout, although Mark Nathan of Arnhem Asset Management believes that all four major banks will leave dividends unchanged in the near-term.

CORPORATES
WESTPAC BANKING CORPORATION – ASX WBC, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, AURORA FUNDS MANAGEMENT LIMITED, ARNHEM INVESTMENT MANAGEMENT PTY LTD, MORGAN STANLEY AUSTRALIA LIMITED, UBS HOLDINGS PTY LTD, CLSA AUSTRALIA PTY LTD, MACQUARIE GROUP LIMITED – ASX MQG, RESERVE BANK OF AUSTRALIA, MOODY’S INVESTORS SERVICE INCORPORATED, WATERMARK FUNDS MANAGEMENT PTY LTD, DICK SMITH HOLDINGS LIMITED – ASX DSH, ARRIUM LIMITED – ASX ARI, PEABODY ENERGY CORPORATION

Traders kiss goodbye to Aussie’s high hopes

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Original article by Stephen Cauchi
The Australian Financial Review – Page: 29 : 29-Apr-16

The Australian dollar has retreated from recent highs after the latest inflation data showed that the CPI fell by 0.2 per cent in the March 2016 quarter. Currency traders now do not expect the currency to test the $US0.80 level in the near-term, while the inflation data has also heightened expectations of further monetary policy easing. However, currency strategists are divided about the outlook for the dollar, with year-end forecasts ranging from $A0.70 to $A0.78.

CORPORATES
RESERVE BANK OF AUSTRALIA, WESTPAC BANKING CORPORATION – ASX WBC, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, HSBC AUSTRALIA HOLDINGS PTY LTD, MARKET ECONOMICS PTY LTD, CAPITAL ECONOMICS LIMITED, THINKFOREX

Business Confidence jumps again in April – up 7.4pts to 123.1

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Original article by Roy Morgan Research
Market Research Update – Page: Online : 28-Apr-16

A Roy Morgan Business Single Source survey has found that Australian business confidence rose by 7.4 points (or 6.4 per cent) to 123.1 in April 2016. Business confidence has now risen 12.5 points over the last three months, since a 2016 low of 110.6 in January. The rise in Business Confidence comes after more improvement on the Australian sharemarket in April, and as commodity prices rebounded in recent months following increased global stimulus. The level of business confidence in April is clearly positive for the economy overall and is now above the five-year average of 116.8. The strongest indicators in April relate to the upcoming year, with expectations of business performance over the next 12 months (+38.1) and whether the next 12 months will be a "good/bad time to invest" (+26.3).

CORPORATES
ROY MORGAN RESEARCH LIMITED, AUSTRALIA. DEPT OF THE PRIME MINISTER AND CABINET, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, STANDARD AND POOR’S ASX ALL ORDINARIES INDEX, AUSTRALIAN BUILDING AND CONSTRUCTION COMMISSION

ANZ-Roy Morgan Australian Consumer Confidence dips to 111.7

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Original article by Roy Morgan Research
Market Research Update – Page: Online : 27-Apr-16

The ANZ-Roy Morgan Consumer Confidence rating for Australia fell 3.5 per cent to 111.7 in the week ended 24 April 2016, reversing the bounce in the previous week and falling back below its long run average. Consumers’ views towards their current personal finances fell by 3.3 per cent, although consumers’ views towards their future personal situation rose by 1.3 per cent. Roy Morgan Research executive chairman Gary Morgan says the fall in consumer confidence can be attributed to the economic uncertainty over the closure of Arrium and Electrolux, and continuing announcements of redundancies at several companies, and is also not surprising when one considers the pressures on the Australian economy – many of these issues are exacerbated by the Reserve Bank’s insistence on keeping interest rates much higher (currently at 2 per cent) than comparable commodity economies.

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

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