K62 Finance

Economists raise chances of QE

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Original article by David Rogers
The Australian – Page: 17 & 27 : 26-Sep-19

UBS’s chief economist George Tharenou says there is a growing possibility that the Reserve Bank of Australia will have to resort to unconventional monetary policy options. He says the US Federal Reserve is likely to reduce official interest rates by another one per cent over the next year, as US economic growth slows due to the latest round of tariff hikes. This in turn will put pressure on the RBA to further ease monetary policy, and potentially resort to measures such as quantitative easing. Tharenou expects the RBA to reduce the cash rate to just 0.25 per cent by May 2020.

CORPORATES
RESERVE BANK OF AUSTRALIA, UBS HOLDINGS PTY LTD, UNITED STATES. FEDERAL RESERVE BOARD, UNITED STATES. EXECUTIVE OFFICE OF THE PRESIDENT

CBA cut heats up home loan war

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Original article by Duncan Hughes
The Australian Financial Review – Page: 12 : 25-Sep-19

The Commonwealth Bank of Australia will reduce its interest rates on a range of mortgage loans for owner-occupiers and property investors. The rate cuts range from 10 basis points to 90 basis points, and apply to loan periods ranging from one to five years. Mortgage brokers say the move suggests that CBA expects the Reserve Bank to further ease monetary policy. Westpac recently announced a reduction in its mortgage loan serviceability floor.

CORPORATES
COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, WESTPAC BANKING CORPORATION – ASX WBC, RESERVE BANK OF AUSTRALIA, UNIVERSITY OF NEW SOUTH WALES

Westpac dividend under pressure

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Original article by James Eyers
The Australian Financial Review – Page: 17 : 23-Sep-19

There is growing speculation that Westpac could reduce its dividend payout in response to the Reserve Bank of New Zealand’s new capital requirements. Westpac has yet to determine the size of its final dividend for 2018-19, but Credit Suisse has forecast both a lower payout and a capital raising of at least $1.5bn when Westpac releases its full-year results in early November. The prospect of further official interest rate cuts in Australia is also weighing on the earnings of the nation’s banks.

CORPORATES
WESTPAC BANKING CORPORATION – ASX WBC, RESERVE BANK OF NEW ZEALAND, CREDIT SUISSE (AUSTRALIA) LIMITED, CITIGROUP PTY LTD, RESERVE BANK OF AUSTRALIA, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, EVANS AND PARTNERS ASIA FUND – ASX EAF, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, PM CAPITAL LIMITED

Westpac gives itself 12 months to replace CFO

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Original article by Tim Boyd
The Australian Financial Review – Page: 20 : 13-Sep-19

Westpac announced on 12 September that chief financial officer Peter King will retire in 2020, with King having joined Westpac from Deloitte in 1994. King became deputy CFO in 2011 and CFO in 2014, replacing Phil Coffey. King says that Westpac has transformed itself in the time that he has been there, while UBS banking analyst Jonathan Mott said that whomever Westpac chooses to replace King "will have some big boots to fill". Westpac CEO Brian Hartzer thanked King for his significant contribution to the company.

CORPORATES
WESTPAC BANKING CORPORATION – ASX WBC, DELOITTE TOUCHE TOHMATSU LIMITED

Bank bosses need a reality check

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Original article by James Frost
The Australian Financial Review – Page: 1 & 6 : 12-Sep-19

Former regulator Graeme Samuel told a parliamentary hearing on 11 September that the ANZ needs a "reality check". Samuel was responding to questions about his review of the Australian Prudential Regulation Authority (APRA), with Samuel noting that the ANZ was one of 32 entities that have chosen not to make their prudential self-assessment public. He said that the National Australia Bank had set the benchmark by releasing its self-assessment in late 2018, and that the ANZ should be compelled to submit to a snap inquiry if it did not release its review.

CORPORATES
AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY NATIONAL AUSTRALIA BANK LIMITED – ASX NAB WESTPAC BANKING CORPORATION – ASX WBC

ANZ tips 0.25pc cash rate by May

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Original article by Melissa Yeo, David Rogers
The Australian – Page: 21 : 6-Sep-19

The ANZ Bank’s head of Australian economics David Plank expects the Reserve Bank to reduce the cash rate by 0.25 per cent in October, and he says it is likely to ease monetary policy again in February and May 2020. Plank says factors such as the outlook for unemployment and global uncertainty will see official interest rates fall to a record low of 0.25 per cent. UBS economist George Tharenou also anticipates rate cuts in October and February, and he has flagged the potential for a third rate cut in March.

CORPORATES
AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, RESERVE BANK OF AUSTRALIA, UBS HOLDINGS PTY LTD

Brokers lift share of housing pie as bank branches lose business

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Original article by Richard Gluyas
The Australian – Page: 21 : 4-Sep-19

Data from UBS shows that Australia’s major banks account for 79 per cent of existing mortgage loans. However, Jon Mott of UBS says their share of new home loans is likely to keep falling as the trend toward alternatives such as mortgage brokers gathers pace. UBS also notes that the proportion of home loans that are sold via bank branches has fallen from 48 per cent in fiscal 2013 to just 37 per cent. Mott notes that the major banks’ aggressive push to close bank branches in recent years has contributed to the growing use of mortgage brokers.

CORPORATES
UBS HOLDINGS PTY LTD

ANZ boss braces for slowdown

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Original article by Richard Gluyas, Glenda Korporaal, David Rogers, Andrew White
The Australian – Page: 17 & 25 : 4-Sep-19

Harvey Norman chairman Gerry Harvey expects the Reserve Bank of Australia to reduce the cash rate to at least 0.5 per cent, but he says this will do little to stimulate the economy. The RBA signalled on 3 September that official interest rates are likely to remain low for an extended period; ANZ Bank CEO Shayne Elliott says record low interest rates demonstrate that central banks are concerned about the global economic outlook. The RBA’s monthly board meeting coincided with the release of data showing that retail spending fell by 0.1 per cent in July, compared with economists’ expectations of an 0.2 per cent increase.

CORPORATES
RESERVE BANK OF AUSTRALIA, HARVEY NORMAN HOLDINGS LIMITED – ASX HVN, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, WESTPAC BANKING CORPORATION – ASX WBC, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, AUSTRALIAN BUREAU OF STATISTICS, AUSTRALIAN TAXATION OFFICE, LATITUDE FINANCIAL SERVICES AUSTRALIA HOLDINGS PTY LTD

Aviva tips weaker dollar, eyes global recession

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Original article by Adam Creighton
The Australian – Page: 17 & 18 : 2-Sep-19

Aviva Investors’ chief economist Michael Grady is bearish about the Australian dollar, saying that it could fall to the low $US0.60s level by the end of 2019. He stresses that the potential slump in the currency’s value is not solely due to the outlook for the Chinese economy, noting amongst other things that the link between the dollar and the terms of trade has broken down. Grady adds that the trade war with the US could reduce China’s economic growth by a further 1-1.25 per cent, while he says there is an even chance of a global recession before the end of 2019.

CORPORATES
AVIVA INVESTORS

Wary APRA orders more stress-tests for banks

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Original article by Richard Gluyas
The Australian – Page: 17 & 21 : 30-Aug-19

The Australian Prudential Regulation Authority currently undertakes "stress-testing" of the nation’s banks every three years. However, growing concern about the outlook for the domestic and global economies is believed to have prompted APRA to conduct annual stress tests. APRA’s latest corporate also shows that the performance of superannuation funds will also be a focus for the prudential regulator over the next few years; this will include ranking super funds based on a range of metrics.

CORPORATES
AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY