K62 Finance

Banks told: hand over RBA cut

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Original article by Matthew Cranston
The Australian Financial Review – Page: 1 & 4 : 4-Jun-19

The Reserve Bank of Australia is widely expected to reduce official interest rates from 1.50 per cent to 1.25 per cent on 4 June. A cut in rates would mean an end to the longest period of unchanged interest rates in the history of the RBA. Treasurer Josh Frydenberg, who has met with the banks in recent days to discuss issues such as interest rates and the federal government’s proposed securitisation fund, has called on them to pass on any rates cut in fall. However, former RBA board member Warwick McKibbin has urged it not to cut rates, while Don Hamson from Plato Investment Management says any cut in rates would result in increased demand for dividend-paying shares.

CORPORATES
RESERVE BANK OF AUSTRALIA, AUSTRALIA. DEPT OF THE TREASURY, PLATO INVESTMENT MANAGEMENT LIMITED, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, WESTPAC BANKING CORPORATION – ASX WBC, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, FRANKLIN TEMPLETON ASSET MANAGEMENT LIMITED, CORELOGIC AUSTRALIA PTY LTD, JP MORGAN AUSTRALIA LIMITED, DELOITTE TOUCHE TOHMATSU LIMITED

Business wary of RBA rate cut

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Original article by Patrick Durkin, Matthew Cranston
The Australian Financial Review – Page: 1 & 6 : 3-Jun-19

Business leader Tony Shepherd has urged the Reserve Bank to leave official interest rates unchanged in June, arguing that it should wait for the impact of the federal election to fully flow through to the economy. Coca-Cola Amatil CEO Alison Watkins warns that a rate cut in June would leave the central bank with limited "firepower" in the event of a downturn in the economy. However, MYOB Group CEO Tim Reed notes that small businesses generally benefit from interest rate cuts.

CORPORATES
RESERVE BANK OF AUSTRALIA, COCA-COLA AMATIL LIMITED – ASX CCL, MYOB GROUP LIMITED, HSBC AUSTRALIA HOLDINGS PTY LTD, ENERGYAUSTRALIA PTY LTD, VIRGIN AUSTRALIA HOLDINGS LIMITED – ASX VAH, GRAINCORP LIMITED – ASX GNC, QANTAS AIRWAYS LIMITED – ASX QAN, GREATER WESTERN SYDNEY FOOTBALL CLUB, SYDNEY CRICKET GROUND, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, UNIVERSITY OF TECHNOLOGY, SYDNEY, AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION, AUSTRALIAN LABOR PARTY

Record low bond yields turn off investors

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Original article by Jonathan Shapiro, Sarah Turner
The Australian Financial Review – Page: 31 : 31-May-19

The yield on 10-year Australian governments rose to 1.53 per cent on 30 May, having fallen below the official interest rate in the previous trading session. Factor such as the prospect of a rate cut in June and the US-China trade war have weighed on the local bond market, with international fixed income investors now looking at higher-yielding asset classes. Bond managers caution that yields may continue to fall, noting that bonds in countries such as Japan and Germany currently have negative yields.

CORPORATES
JANUS HENDERSON GROUP PLC – ASX JHG, COLCHESTER GLOBAL INVESTORS LIMITED, RESERVE BANK OF AUSTRALIA

New squeeze on big banks

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Original article by James Frost
The Australian Financial Review – Page: 1 & 20 : 31-May-19

The Australian Prudential Regulation Authority is expected to soon announce that smaller banks will have to hold less capital in terms of supporting their mortgage lending. This will enable them to offer cheaper home loans and higher deposit rates, making them more competitive with the larger banks. APRA’s announcement will follow shortly after the Reserve Bank’s June meeting, when it is widely expected to reduce official interest rates to 1.25 per cent.

CORPORATES
AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY, RESERVE BANK OF AUSTRALIA, BENDIGO AND ADELAIDE BANK LIMITED – ASX BEN, BANK OF QUEENSLAND LIMITED – ASX BOQ, SUNCORP GROUP LIMITED – ASX SUN, CITIGROUP PTY LTD, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, WESTPAC BANKING CORPORATION – ASX WBC, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, AUSTRALIA. ATTORNEY-GENERAL’S DEPT. AUSTRALIAN TRANSACTION REPORTS AND ANALYSIS CENTRE

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