K62 Finance

Banks under fire: investigations laid bare by regulator

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Original article by Ben Butler
The Australian – Page: 17 & 21 : 30-Jan-19

Documents released by the financial services royal commission show that the Australian Securities & Investments Commission’s enforcement committee approved the prosecution of National Australia Bank for breaching its financial services licence in June 2018. The committee found that NAB had repeatedly failed to comply with laws requiring it to report serious breaches of its licence within 10 days. NAB’s compliance record also came under scrutiny by the royal commission in August.

CORPORATES
NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION, AUSTRALIA. ROYAL COMMISSION INTO MISCONDUCT IN THE BANKING, SUPERANNUATION AND FINANCIAL SERVICES INDUSTRY, RIO TINTO LIMITED – ASX RIO, TENNIS AUSTRALIA, FEDERAL COURT OF AUSTRALIA, TRIO CAPITAL LIMITED, MACQUARIE GROUP LIMITED – ASX MQG, VAN EYK CAPITAL PTY LTD, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA

Next rates move will be up: RBA’s Harper

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Original article by James Glynn
The Australian – Page: 24 : 30-Jan-19

Reserve Bank of Australia board member Ian Harper has downplayed suggestions that the central bank could further reduce the cash rate. He says the strength of the domestic economy means that interest rates will rise, but stresses that this is his personal view. Meanwhile, Harper adds that there are no indications as yet that the downturn in residential property prices has prompted consumers to reduce their spending. Financial markets have priced in a better-than-even chance that the RBA will reduce the cash rate during 2019.

CORPORATES
RESERVE BANK OF AUSTRALIA, MELBOURNE BUSINESS SCHOOL, COMMONWEALTH SECURITIES LIMITED

Baird defends NAB interest rate hike

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Original article by Joyce Moullakis
The Australian – Page: 15 & 16 : 25-Jan-19

Sally Tindall of RateCity expects other major banks to increase their mortgage interest rates after National Australia Bank announced a rise in its rates for owner-occupiers and investors. NAB has indicated that a rise in wholesale funding costs was the main driver of the rate hike, but chief customer officer Mike Baird notes that it is the first increase in its standard variable interest rate since March 2017. NAB chose to leave its mortgage rates on hold when other banks lifted theirs in September.

CORPORATES
NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, RATECITY PTY LTD, BANK OF QUEENSLAND LIMITED – ASX BOQ, VIRGIN MONEY (AUSTRALIA) PTY LTD, RESERVE BANK OF AUSTRALIA, AUSTRALIA. ROYAL COMMISSION INTO MISCONDUCT IN THE BANKING, SUPERANNUATION AND FINANCIAL SERVICES INDUSTRY

RBA will ignore gloom and stay a growth hawk

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Original article by James Glynn
The Australian – Page: 23 : 25-Jan-19

The Reserve Bank of Australia is tipped to scale back its economic growth forecasts for 2019 and 2020, after GDP growth was just 2.8 per cent year-on-year in the December 2018 quarter. The RBA had previously forecast growth of 3.5 per cent for 2018. However, the central bank is expected to maintain its hawkish stance, given that the unemployment rate eased in December. The strong labour market also means an increase in the cash rate is more likely than a cut.

CORPORATES
RESERVE BANK OF AUSTRALIA

Aussie tipped to dive 15pc this year

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Original article by Timothy Moore
The Australian Financial Review – Page: 31 : 25-Jan-19

Capital Economics has downgraded its forecast for the Australian dollar in 2019. The firm has warned that the currency could test $US0.60 and remain at around this level in 2020. It had previously expected the currency to trade at about $US0.65 in 2019 and $US0.70 in the following year. Capital Economics is also bearish about the outlook for Australia’s key export commodities, iron ore and coal, while it expects official interest rate cuts in 2019.

CORPORATES
CAPITAL ECONOMICS LIMITED, MORGAN STANLEY AUSTRALIA LIMITED

Hacking risks higher under open banking

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Original article by James Eyers
The Australian Financial Review – Page: 19 : 24-Jan-19

The Australian Banking Association has expressed concern that theft of personal data and email scams will become rife under the federal government’s open banking regime. Open banking is slated to begin on 1 February 2020, with a pilot program to commence in July 2019. The ABA’s submission to the Treasury’s draft report on open banking has called for the terms of reference for the pilot program to include an assessment of the potential privacy risks.

CORPORATES
AUSTRALIAN BANKING ASSOCIATION, AUSTRALIA. DEPT OF THE TREASURY, AUSTRALIAN COMPETITION AND CONSUMER COMMISSION

CBA dividend cut on the cards as sell-offs create an earnings hole

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Original article by Misa Han
The Australian Financial Review – Page: 21 : 22-Jan-19

Richard Wiles of Morgan Stanley suggests that the Commonwealth Bank of Australia may have to reduce its dividend payout ratio following a series of asset sales. CBA exited the life insurance sector in 2018 and secured a deal to sell Colonial First State Global Asset Management. It also proposed to spin-off its wealth management and mortgage broking operations. CBA paid a fully franked full-year dividend of $4.31 per share in fiscal 2018, an increase of $0.02.

CORPORATES
COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, MORGAN STANLEY AUSTRALIA LIMITED, COLONIAL FIRST STATE GLOBAL ASSET MANAGEMENT, COLONIAL FIRST STATE GROUP LIMITED, COUNT FINANCIAL LIMITED, FINANCIAL WISDOM LIMITED, AUSSIE HOME LOANS LIMITED, COUNTPLUS LIMITED – ASX CUP, MORTGAGE CHOICE LIMITED – ASX MOC, SOCIETYONE AUSTRALIA PTY LTD

Hayne’s grenade about to explode

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Original article by Joyce Moullakis
The Australian – Page: 15 & 23 : 18-Jan-19

The banking royal commission is due to present its final report to the federal government on 1 February, although it may be a day or two before the report is made public. There are a number of companies within the financial services sector whose share price could be impacted by the report’s content and recommendations, including AMP, IOOF and Mortgage Choice. Treasurer Josh Frydenberg has hinted that the report will be released outside of stock exchange trading hours, while he says the commission’s initial report and hearings have shown that certain financial institutions have not done a good job when it comes to treating Australians honestly and fairly.

CORPORATES
AUSTRALIA. ROYAL COMMISSION INTO MISCONDUCT IN THE BANKING, SUPERANNUATION AND FINANCIAL SERVICES INDUSTRY, AMP LIMITED – ASX AMP, IOOF HOLDINGS LIMITED – ASX IFL, MORTGAGE CHOICE LIMITED – ASX MOC, AUSTRALIA. DEPT OF THE TREASURY, WESTPAC BANKING CORPORATION – ASX WBC, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, AUSTRALIAN FINANCE GROUP LIMITED – ASX AFG, AUSTRALIAN LABOR PARTY, DEUTSCHE BANK AG, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, GREAT BRITAIN. FINANCIAL CONDUCT AUTHORITY

Banks plan exit from uninvestible Britain

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Original article by Sarah Turner, Hans van Leeuwen, Lisa Murray
The Australian Financial Review – Page: 1 & 10 : 16-Jan-19

The Commonwealth Bank has confirmed that it will establish a subsidiary in Amsterdam in response to continuing uncertainty surrounding Britain’s departure from the European Union. Other Australian banks with a presence in the UK are also looking to set up subsidiaries in other European countries to ensure that they can keep operating in the region. Mark Tinkler of AXA Investment Managers says the UK is largely "uninvestible" until the Brexit uncertainty is resolved. The British parliament will shortly vote on the Brexit deal of Prime Minister Theresa May.

CORPORATES
COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, AXA INVESTMENT MANAGERS PTY LTD, GREAT BRITAIN. OFFICE OF THE PRIME MINISTER, WESTPAC BANKING CORPORATION – ASX WBC, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, ALPHINITY INVESTMENT MANAGEMENT PTY LTD, GRANT SAMUEL FUNDS MANAGEMENT PTY LTD, GERMANY. FEDERAL FINANCIAL SUPERVISORY AUTHORITY (BAFIN), BANK OF ENGLAND. PRUDENTIAL REGULATION AUTHORITY

Savers under pressure as banks keep lowering rates

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Original article by Duncan Hughes
The Australian Financial Review – Page: 5 : 15-Jan-19

Analysis by Canstar shows that the average interest rate for a 12-month term deposit of $50,000 is now 2.55 per cent. Likewise, the average online savings interest rate is now just 1.35 per cent, compared with a peak of 7.3 per cent in 2008. In contrast, the cash rate is 1.5 per cent and Australia’s inflation rate is 1.9 per cent. Professor Richard Holden from the University of New South Wales warns that low interest rates will encourage more savers to seek higher-risk investment options such as shares.

CORPORATES
CANSTAR PTY LTD, UNIVERSITY OF NEW SOUTH WALES, SEMAPHORE PRIVATE PTY LTD, RESERVE BANK OF AUSTRALIA, AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY, VIRGIN MONEY (AUSTRALIA) PTY LTD, BANK OF QUEENSLAND LIMITED – ASX BOQ