K62 Finance

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

Macquarie’s $1.6bn capital raise

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Original article by Joyce Moullakis
The Australian – Page: 17 & 21 : 29-Aug-19

Macquarie Group has advised that its profit for the six months to 30 September will be about 10 per cent higher than the $1.3bn result for the same period in 2018. Macquarie posted a record profit of $2.98bn for the year to 31 March, and Jonathan Mott of UBS has forecast a profit of $3.04bn for fiscal 2020. Meanwhile, Macquarie is seeking to raise $1bn from institutional investors and up to $600m from retail investors via a share purchase plan. Most of the proceeds will be invested in assets such renewable energy, technology and infrastructure.

CORPORATES
MACQUARIE GROUP LIMITED – ASX MQG, UBS HOLDINGS PTY LTD, CADENCE CAPITAL LIMITED – ASX CDT, MOODY’S INVESTORS SERVICE INCORPORATED, CITIGROUP PTY LTD

NPS of banks (and big four banks) continues to improve after Finance Royal Commission

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Original article by Roy Morgan
Market Research Update – Page: Online : 28-Aug-19

New results from Roy Morgan show that the Net Promoter Score levels of Australia’s banks, including the big four banks, have increased significantly since the final report of the Finance Royal Commission was handed down in February 2019. The NPS of the big four banks was 2.1 in July, up 3.7pts since February, and the NPS of banks as a whole was 8.5, up 3.2pts over the last five months. The improvement in NPS scores has returned the measure to a level comparable to that at the time the Finance Royal Commission was established in late 2017. All of the big four banks have improved their NPS since February. The leading big four bank by NPS is the CBA (now on 7.2, up 3.3pts since February). The other three, although improved, were still in negative territory. Teachers Mutual Bank now has the highest NPS of 52.6, up 13.5pts since February. Meanwhile, satisfaction with the big four banks reached 76.1% in July, up by 0.8% points since February, led by increases for the CBA (+1% point), ANZ (+0.9% points) and Westpac (+2.3% points). These are some of the latest findings from Roy Morgan’s ‘Customer Satisfaction report on Consumer Banking in Australia’ and the ‘Financial Institutions Advocacy Report’. These reports are 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, BENDIGO BANK, ING BANK (AUSTRALIA) LIMITED, AUSTRALIA. ROYAL COMMISSION INTO MISCONDUCT IN THE BANKING, SUPERANNUATION AND FINANCIAL SERVICES INDUSTRY