K62 Finance

Rate cut to avoid poll date as economy becomes battleground

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Original article by David Rogers
The Australian – Page: 19 & 29 : 12-Apr-19

Financial markets have priced in a 25 basis point reduction in official interest rates by October, although the chances of a rate cut during the federal election campaign are seen to be low. Meanwhile, Shane Oliver of AMP Capital says historical analysis shows that movements in global sharemarkets tend to have a bigger impact on the local bourse than the outcome of a federal election. However, he notes that Labor’s policies such as income tax and franking credit reforms may weigh on shares and the Australian dollar.

CORPORATES
AMP CAPITAL INVESTORS LIMITED, AUSTRALIAN LABOR PARTY, RESERVE BANK OF AUSTRALIA, CITIGROUP PTY LTD, AUSTRALIA. DEPT OF THE PRIME MINISTER AND CABINET, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, STANDARD AND POOR’S ASX 200 INDEX

S&P concerned big banks may lose support in a crisis

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Original article by James Eyers
The Australian Financial Review – Page: 15 & 20 : 10-Apr-19

A report from S&P Global Ratings says the federal government is likely to remain "highly supportive" of Australia’s major banks in the event of a crisis. However, the ratings agency adds that there is a one-in-three chance that the government will change its position to "supportive" over the next two years. Any change in the government’s level of support for the major banks would most likely prompt their credit ratings to be downgraded, which in turn would increase their funding costs.

CORPORATES
S&P GLOBAL RATINGS, AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY, COUNCIL OF FINANCIAL REGULATORS

CBA’s Colonial buy cost shareholders $54b

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Original article by Jonathan Shapiro
The Australian Financial Review – Page: 17 : 9-Apr-19

The Commonwealth Bank of Australia paid $11 billion for Colonial in 2000, but fund manager Merlon Capital Partners contends that the purchase wasted over $50 billion in shareholder capital. Merlon argues that the CBA’s purchase of Colonial did not create value for its stockholders, and that it demonstrates the need for shareholders to have a greater say about large acquisitions. Merlon has previously been critical of AMP’s 2018 decision to sell its life insurance business.

CORPORATES
COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, COLONIAL LIMITED, MERLON CAPITAL PARTNERS PTY LTD, AMP LIMITED – ASX AMP

ANZ set for growth as it turns corner in Asia

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Original article by James Eyers
The Australian Financial Review – Page: 17 & 20 : 5-Apr-19

The ANZ Bank has been progressively rebuilding its institutional banking business in Asia, which has been its key focus in the region since abandoning retail banking growth plans. ANZ now boasts about 6,500 institutional customers in Asia, compared with some 28,000 at its peak, while staff numbers in the region have been reduced from 8,000 to 6,000 and there was a 16 per cent reduction in costs during 2017-18.

CORPORATES
AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, HSBC HOLDINGS PLC, STANDARD CHARTERED BANK PLC, CITIGROUP INCORPORATED, GREENWICH ASSOCIATES PTY LTD

Market backs rate cuts over fiscal stimulus

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Original article by Sarah Turner
The Australian Financial Review – Page: 9 : 4-Apr-19

The April 2019 Budget has not had much impact on monetary policy expectations, with financial markets still pricing in two interest rate cuts by August 2020. Sally Auld of JP Morgan says the Budget’s fiscal stimulus measures are unlikely to completely offset the impact of factors such as the downturn in housing prices, slowing construction activity and weak growth in real incomes. Meanwhile, economists are more bearish about the economic growth outlook than the Treasury.

CORPORATES
JP MORGAN AUSTRALIA LIMITED, AUSTRALIA. DEPT OF THE TREASURY, RBC CAPITAL MARKETS, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, RESERVE BANK OF AUSTRALIA, AUSTRALIAN LABOR PARTY

Interest rates on hold, but cuts on the cards

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Original article by David Rogers
The Australian – Page: 47 : 3-Apr-19

The Reserve Bank of Australia has signalled that it remains open to monetary policy stimulus if economic conditions justify such action, while keeping the cash unchanged at 1.5 per cent for a 32nd consecutive month. Central bank governor Philip Lowe has also noted a slowdown in global economic growth and an increase in downside risks. Marcel Thieliant of Capital Economics expects official interest rates to be reduced in the near-term.

CORPORATES
RESERVE BANK OF AUSTRALIA, CAPITAL ECONOMICS LIMITED, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB

Big banks miss out as nimble lenders pounce

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Original article by James Frost
The Australian Financial Review – Page: 17 : 2-Apr-19

Specialised lenders such as Scottish Pacific say their customer base is increasing due to the stricter lending standards of the major banks. Scottish Pacific CEO Peter Langham notes that many of the firm’s small business customers would traditionally have secured funding against property from a major bank. Prospa’s co-founder Beau Bertoli agrees that small businesses are finding it harder to secure financing from big banks, noting that they are scrutinising loan applications more carefully.

CORPORATES
SCOTTISH PACIFIC GROUP LIMITED – ASX SCO, PROSPA GROUP LIMITED, AUSTRALIA. OFFICE OF THE AUSTRALIAN SMALL BUSINESS AND FAMILY ENTERPRISE OMBUDSMAN, JUDO CAPITAL PTY LTD, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB

Economists see rates on hold this year

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Original article by Sarah Turner, Vesna Poljak, William McInnes
The Australian Financial Review – Page: 14 & 21 : 1-Apr-19

The latest quarterly survey of economists shows that the general consensus is that the Reserve Bank of Australia will leave official interest rates unchanged at 1.5 per cent for the remainder of 2019. The previous quarterly survey had shown that respondents expected rates to rise to 1.75 by the end of 2019. Meanwhile, the median forecast for the unemployment rate is 5 per cent by mid-2019, compared with a median forecast of 5.20 per cent in the previous survey. Expectations for underlying inflation in mid-2019 have also been pegged back, from 2.10 per cent in the January survey to 1.80 per cent.

CORPORATES
RESERVE BANK OF AUSTRALIA, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, NOMURA AUSTRALIA LIMITED, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, HSBC AUSTRALIA HOLDINGS PTY LTD, BANK OF AMERICA AUSTRALIA LIMITED, MERRILL LYNCH (AUSTRALIA) PTY LTD, MACQUARIE GROUP LIMITED – ASX MQG, CITIGROUP PTY LTD, LAMINAR CAPITAL PTY LTD, DEUTSCHE BANK AG, JP MORGAN AUSTRALIA LIMITED

Ten-year bond yields plumb new depths

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Original article by Vesna Poljak
The Australian Financial Review – Page: 31 : 29-Mar-19

The global bond rally has seen the yield on Australian 10-year bonds fall to a record low of 1.73 per cent, to the same level as New Zealand’s 10-year bonds. However, NZ currently has a higher official interest rate at 1.75 per cent, although futures traders have priced in two rate cuts in Australia by August 2020, which would reduce the cash rate to one per cent. Annette Beacher of TD Securities has not ruled out a further fall in bond yields.

CORPORATES
TD SECURITIES, RESERVE BANK OF AUSTRALIA, RESERVE BANK OF NEW ZEALAND, EUROPEAN CENTRAL BANK, UNITED STATES. FEDERAL RESERVE BOARD, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA

‘Obey the law’: banks rebuked

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Original article by James Frost, John Kehoe, Vesna Poljak
The Australian Financial Review – Page: 1 & 2 : 28-Mar-19

ANZ Bank CEO Shayne Elliott and National Australia Bank chairman Phil Chronican fronted the House of Representative economics committee on 27 March. They argued that greater enforcement of responsible lending laws has contributed to a credit squeeze for home buyers and small businesses. However, Australian Securities & Investments Commission chairman James Shipton rejects such claims, noting that banks have been subject to the responsible lending laws since 2009. ASIC’s deputy chairman Daniel Crennan in turn says banks face an increase in civil and criminal breaches of the law, and he has urged them to co-operate with the corporate regulator.

CORPORATES
AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION, AUSTRALIA. HOUSE OF REPRESENTATIVES STANDING COMMITTEE ON ECONOMICS, AUSTRALIA. ROYAL COMMISSION INTO MISCONDUCT IN THE BANKING, SUPERANNUATION AND FINANCIAL SERVICES INDUSTRY, AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY, JUDO CAPITAL PTY LTD, WESTPAC BANKING CORPORATION – ASX WBC, MLC LIMITED, NULIS NOMINEES (AUSTRALIA) LIMITED, RESERVE BANK OF AUSTRALIA