K62 Finance

Big four reap gains and reward contrarians

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Original article by David Rogers
The Australian – Page: 28 : 2-May-19

The S&P/ASX 200 Banks Index has gained nearly 15 per cent since late December, following a sell-off in the wake of the misconduct exposed by the Hayne royal commission. Tony Brennan of Citigroup says bank stocks still represent a buying opportunity for investors, even though the sector continues to face headwinds. Meanwhile, JP Morgan notes that banks’ revenue may come under pressure if the cash rate is reduced more than once in coming months.

CORPORATES
STANDARD AND POOR’S ASX 200 BANKS INDEX, STANDARD AND POOR’S ASX 200 INDEX, CITIGROUP PTY LTD, JP MORGAN AUSTRALIA LIMITED, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, WESTPAC BANKING CORPORATION – ASX WBC, MACQUARIE GROUP LIMITED – ASX MQG, CREDIT SUISSE (AUSTRALIA) LIMITED

Keep RBA’s rate trigger away from politics

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Original article by Perry Williams, Joyce Moullakis
The Australian – Page: 17 & 22 : 2-May-19

APA Group’s Mick McCormack has weighed into the debate on the outlook for monetary policy, saying the Reserve Bank should not reduce the cash rate in May. He argues that a rate cut during an election campaign would "inevitably" become politicised. ANZ Bank CEO Shayne Elliott also believes that an interest rate cut is needed in May, and a number of economists have forecast a rate cut. However, financial markets have priced in a 44 per cent chance of a rate cut at the central bank’s monthly board meeting.

CORPORATES
APA GROUP – ASX APA, RESERVE BANK OF AUSTRALIA, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, JP MORGAN AUSTRALIA LIMITED, RBC CAPITAL MARKETS, MACQUARIE GROUP LIMITED – ASX MQG, UBS HOLDINGS PTY LTD, MORGANS FINANCIAL LIMITED, TD SECURITIES, CAPITAL ECONOMICS LIMITED, CITIGROUP PTY LTD, NOMURA AUSTRALIA LIMITED

Westpac to take $753m earnings hit

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Original article by Richard Gluyas
The Australian – Page: 19 : 1-May-19

Westpac has advised that its 2018-19 interim cash profit will be marred by writedowns totalling $753m. The bank has increased its half-year provisions for customer remediation by $357m, to $617m in total. Westpac’s financial accounts will also include provisions totalling $136m in relation to the restructuring of its wealth division. Westpac will report its half-year results on 6 May. The ANZ Bank and National Australia Bank will also release their interim results in coming days.

CORPORATES
WESTPAC BANKING CORPORATION – ASX WBC, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, BT FINANCIAL GROUP PTY LTD, AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION, AMP LIMITED – ASX AMP, MACQUARIE GROUP LIMITED – ASX MQG, VIRIDIAN ADVISORY PTY LTD

The votes are in: Macquarie joins calls for an early cut in interest rates

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Original article by Perry Williams, David Rogers
The Australian – Page: 17 & 27 : 30-Apr-19

The chances of a reduction in the cash rate in May is around 50 per cent, according to financial market pricing. However, a growing number of economists expect the Reserve Bank of Australia to ease monetary policy in May. Macquarie Group is the latest to forecast a rate cut in May, and chief economist Ric Deverell says the RBA is unlikely to be unduly concerned about reducing the cash rate during an election campaign. Macquarie says the central bank might also reduce its GDP growth and inflation forecasts at the monthly board meeting.

CORPORATES
RESERVE BANK OF AUSTRALIA, MACQUARIE GROUP LIMITED – ASX MQG, JP MORGAN AUSTRALIA LIMITED, ROYAL BANK OF CANADA, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, UBS HOLDINGS PTY LTD, CAPITAL ECONOMICS LIMITED, CITIGROUP PTY LTD, TD SECURITIES, NOMURA AUSTRALIA LIMITED, WESTPAC BANKING CORPORATION – ASX WBC

McEwan’s RBS exit fuels NAB CEO talk

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Original article by Richard Gluyas
The Australian – Page: 17 & 20 : 26-Apr-19

There is growing speculation that Ross McEwan is a contender to succeed Andrew Thorburn as CEO of National Australia Bank, following his resignation as CEO of the Royal Bank of Scotland. McEwan has been CEO of RBS since 2013, and it has returned to profitability and reinstated dividends under his leadership. Mike Baird and Anthony Healy are widely seen as the leading internal candidates to replace Thorburn, who resigned in February.

CORPORATES
NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, ROYAL BANK OF SCOTLAND GROUP PLC, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, RUSSELL REYNOLDS ASSOCIATES INCORPORATED, MEDIBANK PRIVATE LIMITED – ASX MPL

RBA’s election rate cut no done deal

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Original article by Matthew Cranston, William McInnes
The Australian Financial Review – Page: 4 : 26-Apr-19

The futures market has priced in a 67 per cent chance that the Reserve Bank of Australia will reduce the cash rate in May. IFM’s chief economist Alex Joiner says the central bank is more likely to leave rates on hold until June, so it can take into account the latest employment and wages data. Michael Blythe of the Commonwealth Bank in turn says the RBA would not be concerned about adjusting the cash rate during an election campaign. However, he notes that the central bank has made it clear that the timing of any change in monetary policy will depend on the outlook for unemployment and inflation.

CORPORATES
RESERVE BANK OF AUSTRALIA, IFM INVESTORS PTY LTD, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, AUSTRALIA. DEPT OF THE TREASURY, AUSTRALIAN LABOR PARTY, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, WESTPAC BANKING CORPORATION – ASX WBC, QIC LIMITED, HSBC AUSTRALIA HOLDINGS PTY LTD

Bank loan losses to reduce dividends

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Original article by Richard Gluyas
The Australian – Page: 21 : 24-Apr-19

Citigroup has downplayed investors’ concerns about the high dividend payout ratios of Australia’ major banks. Brendan Sproule of Citigroup says banks are likely to absorb one-off costs rather than reduce their payout ratios. Instead, a sharp increase in loan losses is seen to be the main threat to continued high dividend ratios. Sproules adds that the Reserve Bank of New Zealand’s review of its bank capital framework is unlikely to impact on Australia’s major banks.

CORPORATES
CITIGROUP PTY LTD, BELL POTTER SECURITIES LIMITED, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, WESTPAC BANKING CORPORATION – ASX WBC, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, RESERVE BANK OF NEW ZEALAND

Reserve Bank ready to cut rates

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

The minutes of the Reserve Bank of Australia’s monthly board meeting indicate that the central bank still expects gradual progress in lifting the inflation rate to its target range and reducing the unemployment rate. However, the minutes show that the RBA would be prepared to reduce the cash rate if inflation remains low and unemployment increases. The Australian dollar fell to a two-week low of $US0.714 in local trading in response to the release of the RBA’s minutes.

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

CBA underpays 8000 staff after HR tech system failure

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Original article by James Eyers
The Australian Financial Review – Page: 18 : 17-Apr-19

The Commonwealth Bank of Australia has advised that current and former employees have received some $4.8m in back pay to date, including interest. Problems with the bank’s human resources technology systems resulted in about 8,000 employees being underpaid. Julia Angrisano, the national secretary of the Finance Sector Union, says the bank and its Bankwest subsidiary may ultimately have to repay between $10m and $15m, although CBA believes that the final figure will be much lower. Some employees are also believed to have been paid at below-award rates.

CORPORATES
COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, BANKWEST, FINANCE SECTOR UNION

AMP’s reputation hit harder than big banks

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Original article by Jessica Gardner
The Australian Financial Review – Page: 16 : 16-Apr-19

The rankings of the four major banks and AMP have fallen sharply in the latest corporate reputation index, which is compiled by the Reputation Institute. AMP has fallen 18 places in the annual index, and now ranks last in the list of 60 companies. Oliver Freedman of the Reputation Institute notes that AMP’s corporate reputation has not improved since the Hayne royal commission exposed misconduct at the financial services group in 2018. He adds that AMP and the banks must work harder to restore their reputations.

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