K62 Finance

Big four back in favour for investors

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Original article by Scott Murdoch
The Australian – Page: 17 & 20 : 11-Feb-19

Australia’s banking index gained six per cent in the week ended 8 February, with the rally being attributed to renewed interest in the sector among international equity investors. Rahoul Chowdry of law firm Minter Ellison notes that sovereign risk concerns regarding Australian banks have abated following the release of the financial services royal commission’s final report. Mike Evans from the Bank of America Merrill Lynch and Marianne Birch of Macquarie Capital agree that the final report has created greater certainty for investors.

CORPORATES
MINTER ELLISON, BANK OF AMERICA AUSTRALIA LIMITED, MERRILL LYNCH (AUSTRALIA) PTY LTD, MACQUARIE CAPITAL PTY LTD, AUSTRALIA. ROYAL COMMISSION INTO MISCONDUCT IN THE BANKING, SUPERANNUATION AND FINANCIAL SERVICES INDUSTRY, CITIGROUP PTY LTD

Lowe shortens the odds for a Cup Day cut

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Original article by David Rogers
The Australian – Page: 27 : 8-Feb-19

A growing number of economists expect the Reserve Bank of Australia to reduce the cash rate by the end of 2019, although the general consensus is that interest rates will remain on hold. Meanwhile, financial market traders have priced in a 56 per cent chance of a rate cut by November, compared with just 34 per cent two days ago. UBS now expects the cash rate to be reduced by 25 basis points in November, with a further rate cut in the first half of 2020. However, the Commonwealth Bank expects the next movement in the cash rate to be up, in November 2020.

CORPORATES
RESERVE BANK OF AUSTRALIA, UBS HOLDINGS PTY LTD, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, STANDARD AND POOR’S ASX 200 INDEX

Comyn confident about house prices

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Original article by Joyce Moullakis, Michael Roddan
The Australian – Page: 21 : 7-Feb-19

The Commonwealth Bank has posted a 2018-19 interim cash profit of $4.77bn, which is 2.1 per cent lower than previously. Mortgage and business lending rose by four per cent and five per cent respectively during the half-year, while lending margins were affected by factors such as increased competition and rising funding costs. Meanwhile, CEO Matt Comyn forecasts that growth in housing credit will slow in 2019, although he does not anticipate a sharp decline in house prices.

CORPORATES
COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, RESERVE BANK OF AUSTRALIA, CORELOGIC AUSTRALIA PTY LTD, UBS HOLDINGS PTY LTD

Local banks have world-beating profits

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Original article by Michael Roddan
The Australian – Page: 21 : 7-Feb-19

Reserve Bank governor Philip Lowe has noted that at around 13 per cent, Australian banks have a much higher return on equity than many of their international peers. He was unable to provide an explanation for this, but questioned whether local banks’ higher return on equity is sustainable. Meanwhile, ratings agency Moody’s says the Hayne royal commission’s failure to recommend breaking up the four major banks supports the "strong and stable profitability" of the banking sector.

CORPORATES
RESERVE BANK OF AUSTRALIA, AUSTRALIA. ROYAL COMMISSION INTO MISCONDUCT IN THE BANKING, SUPERANNUATION AND FINANCIAL SERVICES INDUSTRY, MOODY’S INVESTORS SERVICE INCORPORATED, AUSTRALIA. PRODUCTIVITY COMMISSION, AUSTRALIAN COMPETITION AND CONSUMER COMMISSION

Dollar dives as RBA keeps door open on rate cut

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Original article by David Rogers
The Australian – Page: 17 & 27 : 7-Feb-19

Reserve Bank of Australia governor Philip Lowe adopted a more dovish tone on monetary policy on 6 February. He used a National Press Club speech in Sydney to indicate that the RBA has the flexibility to reduce the cash rate if the outlook for unemployment and inflation makes such a move appropriate. The RBA had signalled in December that interest rates are more likely to rise than to fall. Lowe also said that the downturn in house prices is unlikely to affect economic growth.

CORPORATES
RESERVE BANK OF AUSTRALIA, STANDARD AND POOR’S ASX 200 INDEX, JP MORGAN AUSTRALIA LIMITED, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB

NAB bosses dig in: we’ll fix culture

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Original article by Joyce Moullakis
The Australian – Page: 1 & 5 : 6-Feb-19

Brett Le Mesurier of Shaw & Partners expects National Australia Bank CEO Andrew Thorburn to resign by the end of February, followed by chairman Ken Hendy later in the year. However, Thorburn has indicated that he will remain in his role despite attracting criticism in the final report of the financial services royal commission. He also says NAB will review and revise its strategy to improve its culture and governance.

CORPORATES
NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, SHAW AND PARTNERS LIMITED, AUSTRALIA. ROYAL COMMISSION INTO MISCONDUCT IN THE BANKING, SUPERANNUATION AND FINANCIAL SERVICES INDUSTRY, AUSTRALIAN FOUNDATION INVESTMENT COMPANY LIMITED – ASX AFI

Next rates move still up, RBA insists

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Original article by David Rogers, James Glynn
The Australian – Page: 19 & 28 : 6-Feb-19

The Reserve Bank of Australia has downgraded its forecast for economic growth in 2019 from 3.25 per cent to around three per cent, after leaving the cash rate unchanged at 1.5 per cent. The central bank has also advised that it now expects the unemployment rate to fall to around 4.75 per cent over the next several years, while it forecasts an underlying inflation rate of two per cent in 2019. Analysts expect official interest rates to remain on hold for some time.

CORPORATES
RESERVE BANK OF AUSTRALIA, WESTPAC BANKING CORPORATION – ASX WBC, UNITED STATES. FEDERAL RESERVE BOARD, EUROPEAN CENTRAL BANK, AUSTRALIAN BUREAU OF STATISTICS

NAB singled out for most Hayne pain

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Original article by James Thomson
The Australian Financial Review – Page: W1 & W4 : 5-Feb-19

Key executives of National Australia Bank have been criticised in the financial services royal commission’s final report, including CEO Andrew Thorburn and chairman Ken Hendry. Commissioner Kenneth Hayne says the appearances of Thorburn and Henry before the inquiry raised questions as whether NAB had learnt from its past mistakes with regard to the fee-for-no-service scandal. However, Hayne noted that the evidence of Commonwealth Bank CEO Matt Comyn and ANZ counterpart Shayne Elliott showed that they understand the challenges that their banks face.

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

Forecasters tipping RBA will cling to its tightening bias

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Original article by Vesna Poljak
The Australian Financial Review – Page: 22 : 4-Feb-19

Andrew Ticehurst of Nomura expects the Reserve Bank of Australia’s board to retain its bias toward tightening monetary policy when it meets on 4 February. Ticehurst also forecasts that the central bank will scale back its economic growth and inflation forecasts. The general consensus of economists is that the RBA will leave the cash rate unchanged at 1.5 per cent throughout 2019, although financial markets have priced in the chance of a rate cut late in the year.

CORPORATES
RESERVE BANK OF AUSTRALIA, NOMURA AUSTRALIA LIMITED, RBC CAPITAL MARKETS, WESTPAC BANKING CORPORATION – ASX WBC, MARKET ECONOMICS PTY LTD, AMP CAPITAL INVESTORS LIMITED, INDUSTRY SUPER AUSTRALIA PTY LTD, CAPITAL ECONOMICS LIMITED, MORGAN STANLEY AUSTRALIA LIMITED

ASIC to clarify lending rules post Hayne

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Original article by James Eyers
The Australian Financial Review – Page: 17 : 1-Feb-19

The Australian Securities & Investments Commission is expected to issue revised guidelines covering banks and their responsible lending obligations in coming weeks. The new guidelines are expected to be one of the first regulatory responses to the banking royal commission’s final report, which is due to be released on 4 February. The guidelines are likely to state that it is permissible for banks to use technology to help them to make more speedy decisions on loan applications.

CORPORATES
AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION, AUSTRALIA. ROYAL COMMISSION INTO MISCONDUCT IN THE BANKING, SUPERANNUATION AND FINANCIAL SERVICES INDUSTRY, AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY, WESTPAC BANKING CORPORATION – ASX WBC, FEDERAL COURT OF AUSTRALIA, JP MORGAN AUSTRALIA LIMITED