K62 Finance

Banks brace for lockdown losses

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Original article by Joyce Moullakis
The Australian – Page: 13 & 17 : 14-Jul-21

Richard Wiles of Morgan Stanley expects Australia’s major banks to announce combined coronavirus-related loan impairment charges of $700m for the June quarter. Wiles adds that the COVID-19 lockdown in Greater Sydney is likely to prompt the banks to adopt a more conservative approach to making provisions for loan losses. Morgan Stanley also expects loss rates to increase in the second half of 2021 and the first six months of 2022.

CORPORATES
MORGAN STANLEY AUSTRALIA LIMITED

Reserve Bank cools expectations of rise in interest rates

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Original article by David Rogers
The Australian – Page: 13 & 20 : 9-Jul-21

Reserve Bank of Australia governor Philip Lowe has downplayed speculation that it could begin tightening monetary policy in 2022. Lowe has told the Economics Society of Queensland that inflation must be "sustainably" within the RBA’s target range of 2-3 per cent before it will consider a rise in the official interest rate; he added that wage growth of at least three per cent is likely to be needed for inflation to reach the central bank’s target range, while wages growth is "materially" less than three per cent at present. George Tharenou of UBS expects the RBA to abandon its bond yield target in the second half of 2022, which would enable it to increase the cash rate in 2023.

CORPORATES
RESERVE BANK OF AUSTRALIA, UBS HOLDINGS PTY LTD

Investors bring forward rate rise expectations

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Original article by William McInnes
The Australian Financial Review – Page: 25 : 7-Jul-21

Marcel Thieliant of Capital Economics now expects the Reserve Bank of Australia to begin tightening monetary policy in early 2023, and he has flagged a cash rate of 0.75 per cent by the end of that year. RBA governor Philip Lowe has previously reiterated that interest rates are likely to remain at 0.1 per cent until at least 2024, but he indicated in a statement on 6 July that this is now merely its "central scenario" and the conditions that could justify a rate rise could be met earlier than this. Interest rate futures pricing also suggests that the cash rate could begin rising earlier than expected.

CORPORATES
CAPITAL ECONOMICS LIMITED, RESERVE BANK OF AUSTRALIA

Credit cards, home loans lead bank disputes lodged with ombudsman

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Original article by David Ross
The Australian – Page: Online : 5-Jul-21

Preliminary data from the Australian Financial Complaints Authority shows that it handled fewer disputes with financial services providers in 2020-21. The AFCA received more than 70,000 complaints during the financial year, compared with 80,500 in 2019-20. Credit cards accounted for 14 per cent of disputes in the last financial year, ahead of home loans (nine per cent) and personal transaction accounts (eight per cent). The AFCA also received 8,303 coronavirus-related complaints in 2020-21, compared with 5,013 in the last four months of 2019-20.

CORPORATES
AUSTRALIAN FINANCIAL COMPLAINTS AUTHORITY

Forrest joins Gates’ climate venture fund

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Original article by Brad Thompson
The Australian Financial Review – Page: 15 : 5-Jul-21

Andrew Forrest has joined a number of well-known billionaires in investing in Breakthrough Energy Venture, a venture capital fund chaired by Microsoft’s co-founder Bill Gates. BEV will focus on emerging greenhouse gas-reducing technologies, and it has made initial investments in 46 companies across sectors such as electricity, transport and construction. The billionaires who have initially invested in BEV all made a minimum investment of at least US50 million ($66 million).

CORPORATES
MICROSOFT CORPORATION, BREAKTHROUGH ENERGY VENTURES

Buyback bonanza for bank investors

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Original article by Richard Gluyas
The Australian – Page: 16 : 7-Jun-21

Richard Wiles of Morgan Stanley estimates that the combined surplus capital of Australia’s four major banks is within the range of $19.5bn to $28bn. He says the banks could potentially return about $15bn to investors via share buybacks over the next year, with the Commonwealth Bank tipped to repurchase $5bn worth of shares when its 2021 financial results are announced. Buybacks of this magnitude would reduce the number of bank shares on issue by 3-5 per cent.

CORPORATES
MORGAN STANLEY AUSTRALIA LIMITED, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA

CBA breaks through $100 for first time

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Original article by Cliona O’Dowd
The Australian – Page: 13 & 16 : 27-May-21

Shares in the Commonwealth Bank of Australia reached a record intra-day high of $100.20 on 26 May, ending the session at $99.58. CBA’s share price has risen by 12 per cent so far in May, giving it a market capitalisation of $176.7bn. It is now the biggest stock on the local bourse, and the world’s 11th largest bank in terms of market capitalisation. Brett Le Mesurier of Velocity Trade expects CBA shares to trade at around $100 in the near-term, but Dean Fergie of Cyan Investment Management says the stock could rise further.

CORPORATES
COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, VELOCITY TRADE, CYAN INVESTMENT MANAGEMENT PTY LTD

Overall satisfaction with Big 4 banks is higher than a year ago with CBA & NAB the top two

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Original article by Roy Morgan
Market Research Update – Page: Online : 26-May-21

New data from Roy Morgan shows that 80.5% of customers are satisfied with their bank(s) in April 2021, an increase of 1.3% points on a year ago when the COVID-19 pandemic began. The increase was built upon increases in satisfaction for building societies (up 3% points on a year ago), foreign banks (up 2.3% points) and Australia’s ‘Big 4’ banks (up 0.3% points). Satisfaction for the four major banks as a group is 77.1%, up 0.3% points on April 2020, and up 0.2% points on January 2021. The big improver over the last year has been the NAB which has increased its customer satisfaction by 1.9% points to 78.6%, to be just behind the Commonwealth Bank on 78.8% (down 0.2% points). Third is ANZ on 75.0% (up 0.6% points on April 2020), followed by Westpac on 73.5% (down 0.4% points). Among banks as a whole, Beyond Bank scored the highest in April, on 92.7% (up 1.8% points in 12 months). ING was the highest rated foreign bank on 90.6% (up 1.7% points), Newcastle Permanent led the way for building societies on 94.8% (up 3.1% points), while Credit Union Australia was the highest ranked credit union, on 86.9% (up 3.9% points). The findings, taken from Roy Morgan’s Customer Satisfaction report on Consumer Banking in Australia, reflect the successful way the banking sector responded to financial challenges faced by millions of Australians as a result of the 2020 COVID-19 pandemic.

CORPORATES
ROY MORGAN LIMITED, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, WESTPAC BANKING CORPORATION – ASX WBC, BEYOND BANK AUSTRALIA, ING BANK (AUSTRALIA) LIMITED, NEWCASTLE PERMANENT BUILDING SOCIETY LIMITED, CREDIT UNION AUSTRALIA LIMITED

Earnings jump sees CBA eye buybacks

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Original article by Joyce Moullakis
The Australian – Page: 17 : 13-May-21

The Commonwealth Bank of Australia has posted unaudited cash earnings from continuing operations of $2.4bn for the March quarter, compared with about $1.3bn for the same period in 2020. CBA’s common equity tier one ratio was 12.7 per cent at the end of the quarter, well above the regulatory requirement of 10.5 per cent. CBA has more than $10bn of excess capital, and CEO Matt Comyn says its capital management plans are likely to be a key focus for investors when its full-year earnings are released in August. Brett Le Mesurier of Velocity Trade expects CBA to return up to $12bn to investors in the 2022 and 2023 fiscal years via a share buyback

CORPORATES
COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, VELOCITY TRADE LIMITED

Loan deferral scheme a win for economy

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Original article by James Frost
The Australian Financial Review – Page: 19 : 28-Apr-21

More than 468,000 home loan customers in Australia were on deferred repayment plans at the height of the COVID-19 pandemic; this had fallen to 3,170 by the end of March. Likewise, the number of small business borrowers who have deferred their loan repayments has fallen from 235,440 to just 508. Overall, just 0.5 per cent of all loans are still on a ‘repayment holiday’. The loan deferral scheme ended on 31 March, but Australian Banking Association CEO Anna Bligh says the nation’s banks will continue to provide support for distressed households and businesses.

CORPORATES
AUSTRALIAN BANKING ASSOCIATION