K62 Finance

Fixed rate falling to new lows under 3pc

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Original article by Cliona O’Dowd
The Australian – Page: 21 : 22-Aug-19

Australia’s residential property market has received a boost in the lead-up to the key selling season, with a number of banks reducing their fixed mortgage interest rates to new lows. Greater Bank has slashed its one-year fixed rate to just 2.79 per cent, while some owner-occupier loans offered by St George and the Bank of Melbourne have been reduced to 2.94 per cent. Sally Tindall of RateCity cautions that fixed home loan interest rates may fall even lower, given that the Reserve Bank may further reduce the cash rate.

CORPORATES
GREATER BANK LIMITED, ST GEORGE BANK LIMITED, BANK OF MELBOURNE LIMITED, BANK OF SOUTH AUSTRALIA LIMITED, RATECITY PTY LTD, RESERVE BANK OF AUSTRALIA, WESTPAC BANKING CORPORATION – ASX WBC, CANSTAR PTY LTD

Where’s the crisis? Westpac skewers talk of quantitative easing

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Original article by Patrick Commins
The Australian Financial Review – Page: 29 : 22-Aug-19

Lyn Cobley, the head of institutional banking at Westpac, says unconventional monetary policy was necessary in response to the global financial crisis. However, she says there is no need for the Reserve Bank to pursue quantitative easing at present, as the Australian economy and the nation’s banking system are "far from crisis". She adds that Westpac’s senior institutional bankers generally agree that further reducing interest rates would have little impact on the borrowing and investment intentions of their clients.

CORPORATES
WESTPAC BANKING CORPORATION – ASX WBC, RESERVE BANK OF AUSTRALIA, EUROPEAN CENTRAL BANK, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA

More rate cuts in RBA mix to guard economy

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

The minutes of the Reserve Bank of Australia’s latest monthly board meeting show that the central bank will be open to further easing of monetary policy if the economic outlook worsens. The minutes also indicate that RBA board members expect that official interest rates may need to remain at a record low for some time in order to achieve the central bank’s inflation target. However, the RBA also indicated that it will assess developments in the global and domestic economies before taking any further monetary policy action. Sally Auld of JP Morgan does not expect a rate cut until February.

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

Banks should explain credit card fine print

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Original article by Tom McIlroy
The Australian Financial Review – Page: 3 : 20-Aug-19

Research involving almost 400,000 Commonwealth Bank of Australia credit card users suggests that there are benefits to be had by being more transparent with customers. Harvard researchers found that CBA customers who were provided with more transparency about their credit cards spent 9.9 per cent more each month, and were much less likely to cancel their accounts. In announcing the results of their study, authors Ryan W. Buell and MoonSoo Choi called for more research into transparency and customer engagement.

CORPORATES
COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, HARVARD UNIVERSITY

ASIC to sue big banks in weeks

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Original article by John Durie
The Australian – Page: 17 : 19-Aug-19

The Australian Securities & Investments Commission’s deputy chairman Daniel Crennan says it will shortly commence legal action against the four major banks, plus AMP and Macquarie Group. He adds that ASIC is still working on 13 matters that were referred to it by the Hayne royal commission, as well as a further 39 matters that were examined by the inquiry. Meanwhile, ASIC’s latest enforcement update shows that it accepted just one court-enforceable undertaking in the first half of 2019, compared with nine in the second half of 2018. ASIC’s reluctance to pursue litigation came under scrutiny by royal commissioner Kenneth Hayne.

CORPORATES
AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION, AMP LIMITED – ASX AMP, MACQUARIE GROUP LIMITED – ASX MQG, AUSTRALIA. ROYAL COMMISSION INTO MISCONDUCT IN THE BANKING, SUPERANNUATION AND FINANCIAL SERVICES INDUSTRY

Banks rule OK on loan repayments as Westpac beats ASIC

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Original article by Andrew White
The Australian – Page: Online : 14-Aug-19

The Federal Court has dismissed claims by the Australian Securities & Investments Commission that Westpac had breached the responsible lending rules. ASIC’s case against Westpac had been closely observed by lenders, with the responsible lending rules being used by banks to determine a borrower’s ability to repay a loan. In rejecting ASIC’s case against Westpac, Justice Federal Court judge Nye Perram stated Westpac should not be automatically compelled to consider a borrower’s declared living expenses, and should be free to make use of spending benchmarks.

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

Bond signal: ultra-low rates for a decade

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Original article by David Rogers
The Australian – Page: 17 & 26 : 9-Aug-19

The Reserve Bank of Australia is widely tipped to reduce the cash rate below 0.5 per cent within six months, and overnight indexed swaps pricing suggests that the cash rate will average 0.84 per cent over the next decade. David Plank of the ANZ Bank warns that the central bank will most likely need to adopt a quantitative easing policy within 5-10 years; he adds that this will probably not be necessary in the next year or so, unless there is a significant downturn in the global economy.

CORPORATES
RESERVE BANK OF AUSTRALIA, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, RBC CAPITAL MARKETS, EUROPEAN CENTRAL BANK, AUSTRALIA. HOUSE OF REPRESENTATIVES STANDING COMMITTEE ON ECONOMICS

Cheap money squeezes CBA

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Original article by James Eyers, Jonathan Shapiro
The Australian Financial Review – Page: 1 & 18 : 8-Aug-19

The Commonwealth Bank of Australia has posted a 2018-19 cash profit of $8.49bn, which is 4.7 per cent lower than previously; revenue was two per cent lower at $24.4bn. CEO Matt Comyn has warned that the bank’s net interest margin will fall by four basis points in 2019-20 due to the consecutive official interest rate cuts in June and July. He adds that there will be limited scope to pass on further rate cuts to customers, as many of its deposit rates are already close to zero. CBA’s cost-to-income ratio is currently 46.2 per cent, and Comyn says the aim is to reduce it to below 40 per cent over time.

CORPORATES
COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, RESERVE BANK OF AUSTRALIA, JP MORGAN AUSTRALIA LIMITED, CITIGROUP PTY LTD, PM CAPITAL LIMITED, RESERVE BANK OF NEW ZEALAND

Aussie 10-year bond yield drops below 1pc

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Original article by Patrick Commins, Vesna Poljak, Jonathan Shapiro
The Australian Financial Review – Page: 13 & 27 : 7-Aug-19

The fallout from the escalating trade and currency war between the US and China has seen the yield on Australian 10-year government bonds fall below the cash rate for the first time. The bond yield reached a record low of 0.968 per cent on 6 August, before rising to 1.047 per cent late in trading. Meanwhile, the futures market has priced in an 0.25 per cent reduction in the cash rate by October, after the Reserve Bank left official interest rates unchanged at one per cent at its monthly board meeting.

CORPORATES
RESERVE BANK OF AUSTRALIA, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, QIC LIMITED, ARDEA INVESTMENT MANAGEMENT PTY LTD, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, UNITED STATES. DEPT OF THE TREASURY, PEOPLE’S BANK OF CHINA, EXANTE DATA

Big four lending at record low as competition bites

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Original article by Duncan Hughes
The Australian Financial Review – Page: 3 : 6-Aug-19

Analysis by Morgan Stanley suggests that smaller Australian banks and non-authorised deposit-taking institutions are enjoying stronger growth in mortgage lending than the nation’s four largest banks. The ‘big four’ are attempting to counter this by offering incentives and aggressively reducing their interest rates, but some of the smaller lenders are matching these offers. Meanwhile, data from Australian Finance Group shows that the market share of non-bank lenders rose to a record 42 per cent in the June quarter.

CORPORATES
MORGAN STANLEY AUSTRALIA LIMITED, AUSTRALIAN FINANCE GROUP LIMITED – ASX AFG, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, WESTPAC BANKING CORPORATION – ASX WBC, ME BANK, BENDIGO BANK, CANSTAR PTY LTD, THINKTANK, THE BLACKSTONE GROUP LP, LA TROBE FINANCIAL PTY LTD