K62 Finance

Shape of banks’ dividend recovery will be more U than V

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Original article by James Eyers
The Australian Financial Review – Page: 16 & 18 : 24-Jul-20

Brendan Sproules of Citigroup expects Australia’s banks to resume paying dividends in the December quarter, at a reduced payout ratio of just 40 per cent. He does not expect banks’ payout ratios to return to pre-coronavirus levels until fiscal 2022. Westpac and the ANZ Bank recently put their interim dividends on hold, while Citigroup expects the Commonwealth Bank and Bendigo & Adelaide Bank to withhold their dividends for the second half of 2019-20.

CORPORATES
CITIGROUP PTY LTD, WESTPAC BANKING CORPORATION – ASX WBC, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, BENDIGO AND ADELAIDE BANK LIMITED – ASX BEN

Regulator won’t appeal wagyu and shiraz case

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Original article by John Kehoe
The Australian Financial Review – Page: 3 : 22-Jul-20

The Australian Securities & Investments Commission has ruled out an appeal against Westpac’s court win over allegations that it breached responsible lending laws. The full Federal Court recently upheld an August 2019 ruling in Westpac’s favour, and ASIC is believed to have decided that it will not take the matter to the High Court. ASIC will instead urge the federal government to make changes to credit laws in order to clarify the responsible lending rules.

CORPORATES
WESTPAC BANKING CORPORATION – ASX WBC, AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION, FEDERAL COURT OF AUSTRALIA, HIGH COURT OF AUSTRALIA

Satisfaction of Australia’s banks improves amid COVID-19

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Original article by Roy Morgan
Market Research Update – Page: Online : 22-Jul-20

New data from Roy Morgan shows that customer satisfaction with Australia’s banks was at 79.5% in May, up 0.2% points on April and up 1.1% points from May 2019. The biggest improvement in customer satisfaction over the last year was from Australia’s four major banks, with satisfaction up 1.4% points to 77.2% in May. Commonwealth Bank has the highest satisfaction of the four majors in May, closely followed by NAB, ANZ and Westpac. Mutual Banks continue to have the edge in customer satisfaction and are up 0.7% points from a year ago, to 89.2%. The leading Mutual Bank for satisfaction is Bank Australia, closely followed by Bank First and Beyond Bank. The foreign banks operating in Australia have a high customer satisfaction of 85.5% in May, but this is down 0.3% points from a year ago. Of the foreign banks ING is a clear leader for satisfaction ahead of HSBC and Citibank. These are some of the latest findings from Roy Morgan’s ‘Customer Satisfaction report on Consumer Banking in Australia’. This report is based on in-depth interviews conducted face-to-face with over 50,000 consumers per annum in their homes.

CORPORATES
ROY MORGAN LIMITED, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, WESTPAC BANKING CORPORATION – ASX WBC, BANK AUSTRALIA, BANK FIRST, BEYOND BANK AUSTRALIA, ING BANK (AUSTRALIA) LIMITED, HSBC BANK AUSTRALIA LIMITED, CITIBANK PTY LTD

Lockdown to trigger more loan distress

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Original article by Cliona O’Dowd
The Australian – Page: 13 & 20 : 10-Jul-20

Data from the Australian Prudential Regulation Authority shows that banks have deferred 18 per cent of small business loans in response to the coronavirus pandemic. Morgan Stanley has warned that that many businesses in Melbourne that have been forced to shut down for a second time may never re-open, particularly smaller ones. The APRA figures also show that more than 10 per cent of home loan repayments have been put on hold. Loans to investors account for 34 per cent of home loan repayments that have been deferred, prompting concern that there may be a surge in distressed selling.

CORPORATES
AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY, MORGAN STANLEY AUSTRALIA LIMITED

Banks must go harder on costs: KPMG

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Original article by James Frost
The Australian Financial Review – Page: 16 : 9-Jul-20

KPMG partner Hessel Verbeek warns that Australia’s banks face the prospect of single-digit returns on equity in the wake of the coronavirus pandemic. He argues that they will have to be much more aggressive in reducing costs. Verbeek has identified branch closures and product rationalisation as some of the areas that offer scope for cost savings. He notes that overseas banks have been much more active in pursuing such strategies; Australian banks have closed just 14 per cent of their branches since 2015, while British banks have closed 33 per cent.

CORPORATES
KPMG AUSTRALIA PTY LTD

Big banks accused of climate hypocrisy

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Original article by James Fernyhough
The Australian Financial Review – Page: 20 : 8-Jul-20

Market Forces estimates that Australia’s four major banks have provided a combined $35.5bn worth of loans for fossil fuel projects since 2016. The activist group, which is affiliated with Friends of the Earth, contends that this is inconsistent with their commitment to the Paris climate agreement. National Australia Bank’s chief risk officer Shaun Dooley recently stated that the bank aims to assist business customers to transition away from fossil fuels, due to the economic impact of a complete and rapid withdrawal from the sector.

CORPORATES
MARKET FORCES, FRIENDS OF THE EARTH, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB

Banks to extend loan deferrals

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Original article by Joyce Moullakis
The Australian – Page: 13 & 19 : 8-Jul-20

Australian banks have agreed to extend the deferral of household and business loan repayments by up to four months. The move follows concern about a looming ‘financial cliff’ when the current six-month deferral period ends in September. However, the Australian Banking Association has stressed that customers who have the capacity to resume loan repayments when the initial deferral period ends should do so. It is estimated that nearly 800,000 bank customers have deferred their loan repayments due to the coronavirus pandemic.

CORPORATES
AUSTRALIAN BANKING ASSOCIATION

Cash warns banks to reduce tap and go fees

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Original article by James Eyers
The Australian Financial Review – Page: 12 : 26-Jun-20

The Minister for Small and Family Business, Michaelia Cash, says retailers have complained that banks are not offering to send ‘tap and go’ payments down the cheapest payment network. Previous research has indicated that retailers could be paying up to $550 million in extra transaction fees a year because banks are sending payments through the more expensive networks operated by Visa and Mastercard than via the cheaper Eftpos network. Cash has called on the banks to offer ‘least cost routing’ to retailers, whereby transactions are automatically processed through the network that charges the lowest fee.

CORPORATES
AUSTRALIA. DEPT OF EMPLOYMENT, SKILLS, SMALL AND FAMILY BUSINESS

Banks get a break on customer obligations

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Original article by Richard Gluyas
The Australian – Page: 16 : 26-Jun-20

The Banking Code of Practice, which was approved by the Australian Securities & Investments Commission in December, aims to implement recommendations of the Hayne royal commission. However, ASIC has announced that it has given banks a temporary reprieve from some of the code’s provisions. ASIC has stated that the impact of COVID-19 should be taken into account when considering if a bank has met its commitment to engage ethically and fairly with small business clients; ASIC also noted that banks may not always be able to meet timelines in the code for customer communication.

CORPORATES
AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION

CBA leads small business banking satisfaction during COVID-19 shutdowns

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Original article by Roy Morgan
Market Research Update – Page: Online : 24-Jun-20

New research from Roy Morgan shows that small business owner banking satisfaction for the four major banks was at 71% in the 12 months to April, an increase of 0.9% points from the year to March as shutdowns were enforced across the Australian economy. Satisfaction increased for all four major banks and was highest in the year to April for the Commonwealth Bank at 74.6%, up 0.9% points on the corresponding figure for March. However, the biggest increase was for ANZ which increased 1.1% points to 64.2% while there were also increases in satisfaction for both Westpac and NAB. These are the latest findings from interviews with 2,359 small businesses owners as part of the Roy Morgan Business Owner Satisfaction Monitor regarding their level of satisfaction with the financial institution they deal with.

CORPORATES
ROY MORGAN LIMITED, 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