K62 Finance

Reserve Bank sticks to the plan despite Covid resurgence

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Original article by David Rogers
The Australian – Page: 15 & 20 : 4-Aug-21

The Reserve Bank of Australia has confirmed that it still intends to reduce its weekly bond-buying program from $5bn to $4bn in early September, following its latest monthly board meeting. Westpac’s chief economist Bill Evans says the decision was surprising, given that the RBA had consistently reiterated that its quantitative easing program would be guided by factors such as the economic outlook and the COVID-19 pandemic. The central bank has conceded that the economy is likely to contract in the September quarter, due to the impact of lockdowns. The RBA has also reiterated its view that the cash rate will not rise until inflation is ‘sustainably’ within its target range of 2-3 per cent.

CORPORATES
RESERVE BANK OF AUSTRALIA, WESTPAC BANKING CORPORATION – ASX WBC

Regulate Apple Pay, says CBA

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Original article by James Eyers
The Australian Financial Review – Page: 1 & 22 : 28-Jul-21

Commonwealth Bank CEO Matt Comyn appeared before the parliamentary joint committee on corporations and financial services on 27 July. He told the committee that Apple Pay is now an essential service in the payments system and should therefore be subject to greater regulation, given that access to the iPhone’s near-field communication chip is restricted solely to Apple’s own digital wallet. Tom Leuner from the Australian Competition & Consumer Commission also noted that restrictions on access to the chip could potentially raise competition concerns. Some 9,000 banks worldwide now use Apple Pay, including Australia’s four major banks.

CORPORATES
COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, AUSTRALIA. PARLIAMENTARY JOINT COMMITTEE ON CORPORATIONS AND FINANCIAL SERVICES, APPLE INCORPORATED, APPLE PAY, AUSTRALIAN COMPETITION AND CONSUMER COMMISSION

RBA may rethink tapering as lockdowns bite

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Original article by David Rogers
The Australian – Page: 19 : 21-Jul-21

The Reserve Bank of Australia recently signalled that it will begin scaling back its bond-buying program in September, amid the nation’s stronger-than-expected economic recovery from the COVID-19 pandemic. However, economists at a number of banks anticipate that the potential economic impact of the latest wave of lockdowns will prompt the central bank to delay plans to slash its bond-buying program by $1bn a week. Gareth Aird from the Commonwealth Bank says the RBA could potentially start to reduce its bond purchases in November.

CORPORATES
RESERVE BANK OF AUSTRALIA, COMMS GROUP LIMITED – ASX CCG

SMEs squirrel away cash in crisis: ANZ

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Original article by Jared Lynch
The Australian – Page: 13 & 16 : 19-Jul-21

ANZ Bank’s CEO Shayne Elliott says the amount of cash held in bank deposits has surged during the last year, with small businesses and consumers opting to save during the COVID-19 pandemic. He notes that small businesses in particular are opting to save at an "unprecedented rate", adding that this trend could have a slight negative impact on the national economy. However, Elliott says increased savings means that small businesses are in a much stronger position during the current lockdowns compared with 2020.

CORPORATES
AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ

NAB eyes Citi’s retail in $2b deal

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Original article by James Eyers
The Australian Financial Review – Page: 18 : 14-Jul-21

National Australia Bank has emerged as a potential buyer of Citigroup’s local consumer banking business. NAB has advised that it is holding talks with Citigroup but stresses that a deal may not eventuate. Citigroup has an 11 per cent share of Australia’s credit card market, making it the fifth-biggest player in the sector, while it holds $5.5bn worth of household deposits and some $6.6bn worth of home loans. Australian Competition & Consumer Commission chairman Rod Sims recently indicated that it would closely scrutinise any bid for the Citigroup assets by one of the nation’s major banks.

CORPORATES
NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, CITIGROUP PTY LTD, AUSTRALIAN COMPETITION AND CONSUMER COMMISSION

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