K62 Finance

Westpac flags $1.4b first-half hit, expects more to come

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Original article by James Frost
The Australian Financial Review – Page: 15 & 18 : 15-Apr-20

Westpac has advised that its financial accounts for the first half of fiscal 2020 will include provisions of $1,030m associated with Austrac’s money-laundering probe. Westpac will also increase its provisions for customer remediation and legal costs by $260m. The financial hit will reduce Westpac’s common equity tier 1 capital ratio by about 30 basis points, to 10.5 per cent. Dermot Ryan of AMP Capital expects Australian banks that report their half-year results in May to slash their dividend payouts.

CORPORATES
WESTPAC BANKING CORPORATION – ASX WBC, AMP CAPITAL INVESTORS LIMITED

Reserve Bank now important bond player

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Original article by Sarah Turner
The Australian Financial Review – Page: 31 : 15-Apr-20

Su-Lin Ong of RBC Capital Markets says the federal government has issued some $48bn worth of bonds so far in 2019-20. She estimates that the Reserve Bank of Australia has bought about $36bn worth of these government bonds in the last three weeks, as part of its quantitative easing program. Westpac’s Damien McColough notes that the central bank has emerged as one of the largest bond fund managers in the local market. Meanwhile, Ong says government bond issuance for 2019-20 could potentially top $160bn.

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

Bank shareholders face $7bn hit

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Original article by Michael Roddan
The Australian – Page: 13 & 16 : 9-Apr-20

Shares in Australia’s major banks retreated on 8 April, after the Australian Prudential Regulation Authority asked them to consider delaying or reducing their dividend payments due to the coronavirus crisis. The Bank of Queensland has already advised that it will defer its interim dividend, while investors in Westpac, National Australia Bank and the ANZ Bank were slated to receive a combined $7bn worth of dividends in May. Commonwealth Bank shareholders recently received their interim dividends.

CORPORATES
AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY, BANK OF QUEENSLAND LIMITED – ASX BOQ, WESTPAC BANKING CORPORATION – ASX WBC, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA

Reserve Bank likely to slow bond buying

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Original article by Jonathan Shapiro
The Australian Financial Review – Page: 30 : 7-Apr-20

The Reserve Bank of Australia’s quantitative easing program commenced on 20 March, and the central bank initially began purchasing $5bn worth of commonwealth government bonds per day. It has bought some $31bn of such bonds to date, including $10bn in the week ended 3 April. The RBA has been gradually been winding back its bond buying, and Damien McColough of Westpac says that even if its current momentum is maintained it would hold about $80bn worth of government bonds by the end of June. This would constitute about 30 per cent of the government bonds on issue. The RBA has also bought some $5bn worth of state government bonds.

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

Non-banks clamp down on new loans

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Original article by Joyce Moullakis
The Australian – Page: 13 & 14 : 6-Apr-20

Non-bank lender Pepper Australia has increased its home loan interest rates and tightened its credit criteria as it assesses the impact of the coronavirus on its operations. Pepper will stop offering construction loans and will require a bigger deposit for commercial loans, while larger deposits will also be needed for its two types of home loans. Fellow non-bank lender Bluestone has also introduced new credit criteria as well as increasing the rates on all of its loan products by 35 basis points.

CORPORATES
PEPPER AUSTRALIA PTY LTD, BLUESTONE GROUP PTY LTD

Westpac chief Peter King eyes fast restart

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Original article by James Frost
The Australian Financial Review – Page: 1 & 20 : 3-Apr-20

Westpac has appointed Peter King as CEO for the next two years. King, who has been acting CEO since September, says 22,000 of Westpac’s 33,000 employees are now working from home in response to the coronavirus; typically it is around 1,000. Westpac has had 100,000 requests for assistance from customers and 26,000 requests for help from small businesses since the banking sector launched its response to the virus. King says Westpac will looking at businesses that can recover quickly once the worst of COVID-19 is over in terms of the ones it decides to assist.

CORPORATES
WESTPAC BANKING CORPORATION – ASX WBC

‘We’re bloody lucky we’ve got them’: from pariahs to saviours

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Original article by James Frost, James Eyers
The Australian Financial Review – Page: 1 & 7 : 31-Mar-20

Australia’s major banks have received 170,000 requests from households and businesses to defer loan repayments due to the coronavirus pandemic. However, bank CEOs warn that despite being well-capitalised, the sector will need to be very selective with regard to the businesses that it chooses to assist, and those that are already failing cannot expect to receive a financial lifeline. Reserve Bank of Australia board member Ian Harper notes that the crisis has provided banks with an opportunity to redeem themselves following the revelations of misconduct exposed by the Hayne royal commission.

CORPORATES
RESERVE BANK OF AUSTRALIA

Banks race to roll out SME loans

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Original article by Joyce Moullakis
The Australian – Page: 15 & 18 : 23-Mar-20

The federal government will underwrite 50 per cent of new loans made by eligible lenders to small and medium enterprises as part of its response to the coronavirus crisis. Westpac’s acting CEO Peter King says the SME Guarantee Scheme will provide "significant support" to SMEs, while he supports moves to allow people in financial hardship to access their superannuation. The rollout of the scheme in New South Wales and Victoria has been complicated by moves to lockdown non-essential services in coming days, as banks work to keep as many branches open as possible in those states.

CORPORATES
WESTPAC BANKING CORPORATION – ASX WBC, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ

APRA relaxes buffers as CBA slashes rates

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Original article by James Eyers, James Frost
The Australian Financial Review – Page: 19 & 22 : 20-Mar-20

The Australian Prudential Regulation Authority will temporarily ease the "unquestionably strong" equity capital buffers that it imposes on banks. This will allow them to make billions of dollars worth of additional loans to small businesses that are struggling to maintain cashflows during the coronavirus crisis. The Commonwealth Bank responded to APRA’s announcement by cutting its interest rates on small business loans by 100 basis points, while it also cut rates on one-, two- and three-year fixed-rate home loans by 70 basis points.

CORPORATES
AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA

Branchless banks raise the bar as ME Bank and ING lead customer satisfaction ratings

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Original article by Roy Morgan
Market Research Update – Page: Online : 18-Mar-20

New financial data from Roy Morgan shows that ME Bank has the highest banking customer satisfaction among home loan customers, at 92.3%. ME Bank is followed by ING (91.4%), Bendigo Bank (85.8%) and BankSA (83.7%). CBA enjoys the highest home loan customer satisfaction of any of the big four banks, with a rating of 74.1%. Total home loan customer satisfaction with the big four banks is 72.4%. The satisfaction of non-home loan customers follows a similar trend. ING leads the way with a rating of 88.6%, followed by Bendigo Bank (87.9%), ME Bank (85.7%) and Suncorp (80.5%). CBA again has the highest rating of the big four banks, with 79.3% of its non-home loan customers indicating satisfaction with the bank. Total non-home loan customer satisfaction with the big four banks is now at 77.1%. These banking satisfaction ratings are from the Roy Morgan Single Source survey, in-depth face-to-face interviews with over 50,000 Australians each year in their homes.

CORPORATES
ROY MORGAN LIMITED, ME BANK, ING BANK (AUSTRALIA) LIMITED, BENDIGO BANK, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, SUNCORP BANK