K62 Finance

RBA could cut to 0.5 per cent

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Original article by Sarah TurnerMatthew Cranston
The Australian Financial Review – Page: 1 & 8 : 30-May-19

Financial markets have priced in an 86 per cent chance that the Reserve Bank of Australia will reduce the cash rate by 25 basis points in June, for the first time since August 2016. Aberdeen Standard Investments’ Jason Kururangi and mortgage broker Ben Kingsley argue that banks should pass most if not all of the likely reduction on to customers. Meanwhile, Sally Auld of JPMorgan forecasts that the RBA will ease monetary policy four times by mid-2020, reducing the cash rate to 0.5 per cent.

CORPORATES
RESERVE BANK OF AUSTRALIAABERDEEN STANDARD INVESTMENTS AUSTRALIA LIMITEDJP MORGAN AUSTRALIA LIMITEDRATECITY PTY LTDCOMMONWEALTH BANK OF AUSTRALIA – ASX CBAWESTPAC BANKING CORPORATION – ASX WBCAUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZMORGAN STANLEY AUSTRALIA LIMITEDBANK OF AMERICA AUSTRALIA LIMITEDMERRILL LYNCH (AUSTRALIA) PTY LTDRESERVE BANK OF NEW ZEALANDLOAN DOLPHIN

Quantitative easing on cards as economy falters

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Original article by James Glynn
The Australian – Page: 27 : 30-May-19

The 10-year Australian government bond yield fell to a record low of 1.487 per cent in recent days, widening the gap with US Treasuries to 0.75 per cent, while the Australian dollar is close to a 10-year low. David Plank of the ANZ Bank says there has been some speculation in financial markets that the Reserve Bank could pursue quantitative easing in addition to interest rate cuts. However, Stephen Halmarick of the Commonwealth Bank says reducing the cash rate to one per cent and government policies such as income tax cuts should provide sufficient economic stimulus to rule out the need for quantitative easing.

CORPORATES
RESERVE BANK OF AUSTRALIAAUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZCOMMONWEALTH BANK OF AUSTRALIA – ASX CBAJP MORGAN AUSTRALIA LIMITEDUNITED STATES. FEDERAL RESERVE BOARD

Cut taxes, not rates, says Comyn

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Original article by Joyce Moullakis
The Australian – Page: 20 : 29-May-19

The Commonwealth Bank plans to invest some $5bn in it technology platforms over five years, to make them more secure and to improve their functionality. It is part of the bank’s strategy to regain customers’ trust in the wake of the Hayne royal commission. CEO Matt Comyn has also told a business lunch that the bank will close more branches over coming years but it is committed to retaining Australia’s largest branch network. He added that government policies such as tax cuts do more to stimulate the economy than official interest rate cuts.

CORPORATES
COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, AUSTRALIA. ROYAL COMMISSION INTO MISCONDUCT IN THE BANKING, SUPERANNUATION AND FINANCIAL SERVICES INDUSTRY, RESERVE BANK OF AUSTRALIA, HERBERT SMITH FREEHILLS PTY LTD

Satisfaction and NPS of big four banks improving after Finance Royal Commission

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

New results from Roy Morgan shows that customer satisfaction with Australia’s big four banks reached 75.9% in April 2019, up by 0.6% points since February, and their Net Promoter Score was 0.4, up from minus 1.6. Meanwhile, banks outside of the big four currently have a satisfaction rating of 83.8%. It appears that the focus of the Finance Royal Commission on the big four may have had a bigger impact on their rating, which is now down by 3.3% points from prior to the commission, compared to a decline of only 1.1% points for the banks outside of the big four. The CBA has the highest satisfaction among the big four with 78.1%, followed by Westpac (74.7%), ANZ (74.4%) and NAB (72.7%). Among the major smaller banks, Bendigo Bank has the highest rating with 90.1%, followed by ING (89.9%). The banks outside of the big four also continue to have higher NPS scores, with the latest figure for April 2019 being 24.0 compared to the big four on 0.4. The smaller banks now have higher NPS than prior to the Royal Commission, when it was 23.4. 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

Banks bluffing on NZ lending threats: former PM

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Original article by James Eyers
The Australian Financial Review – Page: 17 & 20 : 24-May-19

Former New Zealand prime minister Bill English has concerns about the Reserve Bank of NZ’s plans to require the local subsidiaries of Australia’s big four banks to increase their capital levels. S&P Global Ratings has estimated that the banks would need to raise an additional $8.1 billion, given that Australia’s four major banks have an 86 per cent share of the NZ lending market. English is worried that the move will make the banks more complacent about risk management, although he doubts that they will go ahead with threats to reduce lending in New Zealand.

CORPORATES
RESERVE BANK OF NEW ZEALAND, S&P GLOBAL RATINGS, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY, STOCKBROKERS AND FINANCIAL ADVISERS ASSOCIATION LIMITED, AUSTRALIAN LABOR PARTY

Economy needs rate cuts: Lowe

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Original article by David Rogers
The Australian – Page: 17 & 24 : 22-May-19

Financial markets have priced in a 92 per cent chance that the Reserve Bank of Australia will reduce the cash rate in June, in response to comments made by governor Philip Lowe. He used an Economics Society speech on 21 May to argue that two interest rate cuts are needed to prevent an increase in unemployment and to lift inflation to the central bank’s target range. Financial markets also expect a second interest rate cut by November, and Westpac economist Bill Evans forecasts that the RBA will do so in August.

CORPORATES
RESERVE BANK OF AUSTRALIA, ECONOMICS SOCIETY OF AUSTRALIA, WESTPAC BANKING CORPORATION – ASX WBC, apra use AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY, STANDARD AND POOR’S ASX 200 INDEX, AUSTRALIA. DEPT OF THE PRIME MINISTER AND CABINET, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, AMP CAPITAL INVESTORS LIMITED, JP MORGAN AUSTRALIA LIMITED, NOMURA AUSTRALIA LIMITED, BARCLAYS BANK PLC, RBC CAPITAL MARKETS

Rise in jobless lifts chance of rate cut

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Original article by David Rogers
The Australian – Page: 32 : 17-May-19

Financial markets have priced in a 64 per cent chance that the Reserve Bank of Australia will reduce the cash rate in June, after official data showed that the unemployment rate rose from five per cent to 5.2 per cent in April. However, George Tharenou of UBS still expects the central bank to leave interest rates on hold until July, preferring to wait for the next set of labour market data before taking action. Ben Jarman of JP Morgan forecasts a rate cut in August.

CORPORATES
RESERVE BANK OF AUSTRALIA, UBS HOLDINGS PTY LTD, JP MORGAN AUSTRALIA LIMITED, CITIGROUP PTY LTD, AUSTRALIAN BUREAU OF STATISTICS, STANDARD AND POOR’S ASX 200 INDEX

ASIC to rank companies by complaints

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Original article by Michael Roddan
The Australian – Page: 20 : 16-May-19

The Australian Securities & Investments Commission aims to increase the financial services industry’s accountability with regard to the handling of customers’ complaint. It will rank banks, insurers and superannuation funds on their performance on this issue, with the first data expected to be released by mid-2021. The move to increase the sector’s transparency has been welcomed by David Locke, the CEO of the Australia Financial Complaints Authority; it has received around 6,000 complaints per month since it was established in late 2018.

CORPORATES
AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION, AUSTRALIAN FINANCIAL COMPLAINTS AUTHORITY, AUSTRALIA. ROYAL COMMISSION INTO MISCONDUCT IN THE BANKING, SUPERANNUATION AND FINANCIAL SERVICES INDUSTRY, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, WESTPAC BANKING CORPORATION – ASX WBC, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, AMP LIMITED – ASX AMP, AUSTRALIA. DEPT OF THE TREASURY, AUSTRALIAN CONSUMERS’ ASSOCIATION

Banks’ total Hayne bill may top $10b

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Original article by James Eyers
The Australian Financial Review – Page: 15 & 18 : 14-May-19

The Commonwealth Bank of Australia has reported cash earnings of $1.7bn for the March quarter, which is 28 per cent lower than previously. CBA’s trading update shows that it made additional pre-tax provisions of $714m for customer remediation during the quarter. The bank’s remediation costs have now topped $2.17bn in total, and it has allocated 400 employees to compensation programs. Meanwhile, Brett Le Mesurier of Shaw & Partners says the major banks and AMP have now incurred combined remediation costs of about $9bn. He adds that this could ultimately rise to around $10bn.

CORPORATES
COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, AMP LIMITED – ASX AMP, SHAW AND PARTNERS LIMITED, AUSTRALIA. ROYAL COMMISSION INTO MISCONDUCT IN THE BANKING, SUPERANNUATION AND FINANCIAL SERVICES INDUSTRY, WESTPAC BANKING CORPORATION – ASX WBC, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, KPMG AUSTRALIA PTY LTD, CITIGROUP PTY LTD

Weak housing data boosts odds of rate cut

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Original article by Sarah Turner
The Australian Financial Review – Page: 33 : 14-May-19

Financial markets have priced in a 30 per cent chance that the Reserve Bank of Australia will reduce the cash rate in June, following the release of the latest housing finance data. The figures show that lending fell by 3.2 per cent in March, and by 18.4 per cent year-on-year. Financial markets have now priced in a 98 per cent chance of a rate cut in August. Meanwhile, UBS expects interest rate cuts in July and August,

CORPORATES
RESERVE BANK OF AUSTRALIA, UBS HOLDINGS PTY LTD, AUSTRALIAN BUREAU OF STATISTICS, HSBC AUSTRALIA HOLDINGS PTY LTD, UNITED STATES. EXECUTIVE OFFICE OF THE PRESIDENT