K62 Finance

US economy facing headwinds: Fed

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Original article by Eric Johnston
The Australian – Page: 17 & 28 : 26-Mar-19

Federal Reserve Bank of Chicago president Charles Evans forecasts that US economic growth in 2019 will be within the range of 1.75 per cent to two per cent. Meanwhile, financial markets have priced in a 60 per cent chance that the US Federal Reserve will reduce official interest rates, but Evans expects rates to rise, although not until the second half of 2020. Evans has also downplayed the risk to the US economy and financial markets if Britain’s exit from the European Union is "disorderly".

CORPORATES
FEDERAL RESERVE BANK OF CHICAGO, UNITED STATES. FEDERAL RESERVE BOARD, STANDARD AND POOR’S ASX 200 INDEX, NIKKEI 225 INDEX, CREDIT SUISSE AG

NAB kills off scandal-plagued mortgage referral program

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Original article by James Frost
The Australian Financial Review – Page: 13 & 16 : 26-Mar-19

National Australia Bank has advised that it will end its controversial ‘loan introducer’ program from 1 October. The program sees non-bank employees receive a fee for referring home loan clients, with NAB stating in 2018 that it generates one out of every 20 mortgages written by the bank. NAB also says the program has generated around $2.4 billion worth of home loans, and that around $100 million in referral fees have been paid. Interim CEO and chairman-elect Philip Chronican says he wants customers to come to NAB because of its products and services, not because a third party receives a fee for endorsing it.

CORPORATES
NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, KPMG AUSTRALIA PTY LTD, AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION, AUSTRALIA. ATTORNEY-GENERAL’S DEPT. AUSTRALIAN TRANSACTION REPORTS AND ANALYSIS CENTRE

NAB, ANZ most at risk as Millennials switch

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Original article by Patrick Durkin
The Australian Financial Review – Page: 18 : 25-Mar-19

Millennial Future has found that National Australia Bank and ANZ customers are most likely to change banks in the wake of the banking royal commission. NAB came in for a lot of criticism during the royal commission, while a February survey by Roy Morgan found that NAB was the least trusted bank brand in Australia. Millennial Future’s findings were based on a survey of over 1,200 bank customers between the ages of 19 and 36, although it found that bank and finance brands were still considered more trustworthy than media and insurance brands.

CORPORATES
MILLENNIAL FUTURE, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, ROY MORGAN LIMITED, WESTPAC BANKING CORPORATION – ASX WBC, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA

Chronican plans to put NAB back in business

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Original article by James Eyers
The Australian Financial Review – Page: 1 & 18 : 25-Mar-19

Business banking will be a key focus of National Australia Bank’s growth strategy, says incoming chairman Philip Chronican. He notes that NAB has the biggest presence in Australia’s business banking market, particularly in the small business sector. Chronican has also identified automation as an area in which NAB is lagging behind its rivals, and stresses the need to reduce costs. Other priorities for NAB include appointing a successor to former CEO Andrew Thorburn and restoring its reputation in the wake of the Hayne royal commission.

CORPORATES
NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, AUSTRALIA. ROYAL COMMISSION INTO MISCONDUCT IN THE BANKING, SUPERANNUATION AND FINANCIAL SERVICES INDUSTRY, WESTPAC BANKING CORPORATION – ASX WBC, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, FINANCE SECTOR UNION

Patient Fed backs off rate hikes

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Original article by Vesna Poljak
The Australian Financial Review – Page: 1 & 12 : 22-Mar-19

The Federal Reserve is now widely tipped to leave the cash rate unchanged until 2020, after it adopted a more dovish stance at its latest monetary policy meeting. The central bank has dampened expectations of two interest rate increases in 2019, with chairman Jerome Powell indicating that the cash rate may be left on hold for some time. Meanwhile, the Federal Reserve’s stance has heightened speculation regarding the timing of any rate cut by the Reserve Bank of Australia.

CORPORATES
UNITED STATES. FEDERAL RESERVE BOARD, RESERVE BANK OF AUSTRALIA, BANK OF AMERICA CORPORATION, STANDARD AND POOR’S 500 INDEX

Tax big banks for implied guarantee

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Original article by Michael Roddan
The Australian – Page: 25 : 22-Mar-19

Australia’s four major banks are able to access wholesale funding at cheaper rates because of an implied guarantee that the federal government will not let them fail because of their size. ME Bank CEO Jamie McPhee says governments should tax the bigger banks because they get cheaper funding as a result of the "too big to fail" guarantee, and that this would make it easier for smaller banks to compete. ME Bank has advised that its net profit for the second half of 2018 fell 11 per cent to $41 million.

CORPORATES
ME BANK, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, WESTPAC BANKING CORPORATION – ASX WBC, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, RESERVE BANK OF AUSTRALIA, AUSTRALIA. DEPT OF THE TREASURY, AUSTRALIA. PRODUCTIVITY COMMISSION

Reserve urges stingy banks to open up the credit floodgates

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Original article by Paul Garvey, David Rogers
The Australian – Page: 19 & 29 : 21-Mar-19

The Reserve Bank of Australia’s assistant governor Michele Bullock has urged the nation’s banks to be less risk-averse with regard to mortgage lending. She has used an Urban Development Institute of Australia speech to argue that banks should relax their lending standards in the wake of the Hayne royal commission and the Australian Prudential Regulation Authority’s move to ease restrictions on lending. Bullock added that a credit crunch in Australia is unlikely, but this could depend on the outlook for the housing market.

CORPORATES
RESERVE BANK OF AUSTRALIA, AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY, AUSTRALIA. ROYAL COMMISSION INTO MISCONDUCT IN THE BANKING, SUPERANNUATION AND FINANCIAL SERVICES INDUSTRY, URBAN DEVELOPMENT INSTITUTE OF AUSTRALIA, AUSTRALIAN BANKING ASSOCIATION

Boutique and robo models the new face of financial advice

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Original article by James Eyers, Elouise Fowler
The Australian Financial Review – Page: 17 : 21-Mar-19

Westpac CEO Brian Hartzer expects banks to focus on using automated solutions to provide personal financial advice in future, due to the high cost of providing such services. Hamilton Wealth CEO Will Hamilton agrees that so-called robo-advice may be the only option for banks if they are to continue to offer financial advice on a large scale. Hartzer adds that consumers will still be able to pay for bespoke personal finance advice via boutique firms.

CORPORATES
WESTPAC BANKING CORPORATION – ASX WBC, HAMILTON WEALTH MANAGEMENT PTY LTD, VIRIDIAN ADVISORY PTY LTD, AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION, AUSTRALIA. ROYAL COMMISSION INTO MISCONDUCT IN THE BANKING, SUPERANNUATION AND FINANCIAL SERVICES INDUSTRY, BT FINANCIAL GROUP PTY LTD, KORDA CAPITAL, SIX PARK

Westpac retreats from financial advice

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Original article by James Frost
The Australian Financial Review – Page: 1 & 16 : 20-Mar-19

Westpac will cease serving its existing personal financial advice customers at the end of June, after striking a deal with Viridian to exit the sector. Westpac CEO Brian Hartzer concedes that its personal finance advice business has not been profitable for some time, and increased regulation was a major factor in its decision to withdraw from the sector. Westpac faces restructuring costs of $250m to $300m, while about 900 full-time equivalent employees will be impacted by the decision to exit financial advice. Westpac expects the move to result in annual savings of $280m by 2020.

CORPORATES
WESTPAC BANKING CORPORATION – ASX WBC, VIRIDIAN ADVISORY PTY LTD

Cash rate could fall below 1pc, UBS says

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

George Tharenou of UBS says the Reserve Bank of Australia should immediately reduce the cash rate by 50 basis points to one per cent, given the state of the economy and the housing market. Tharenou adds that the central bank should also signal that it is prepared to cut official interest rates even further in order to avoid a market shock later on. He has also not ruled out measures such as quantitative easing. Tharenou expects rate cuts in July and August, although he says weak labour market data could force its hand earlier.

CORPORATES
RESERVE BANK OF AUSTRALIA, UBS HOLDINGS PTY LTD, AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY