K62 Finance

Low inflation, low unemployment, and Lowe restraint

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Original article by David Uren
The Australian – Page: 1 & 6 : 9-Feb-18

Reserve Bank governor Philip Lowe has indicated that an interest rate rise is now more likely than a rate cut. However, he says the central bank is unlikely to tighten monetary policy until inflation rises around the mid-point of its target range of 2-3 per cent and there is a further reduction in the unemployment rate. He has stressed that the Reserve Bank does not need to adjust monetary policy in line with other central banks. Lowe also says the Reserve Bank does not expect its inflation forecasts to be unduly affected by the recent sharemarket volatility.

CORPORATES
RESERVE BANK OF AUSTRALIA, UNITED STATES. FEDERAL RESERVE BOARD

CBA’s half-year profit misses expectations

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Original article by James Frost
The Australian Financial Review – Page: 13 & 16 : 8-Feb-18

The Commonwealth Bank of Australia has posted a 2017-18 interim cash profit of $A4.73bn, which is 1.9 per cent lower than previously. The result was marred by $A575m worth of provisions, including some $A375m associated with Austrac’s investigation into money-laundering allegations. CBA’s cash profit rose 5.8 per cent to $A5.11 billion if the provisions are excluded. Meanwhile, CBA’s retail banking division has reported a cash profit of $A2.653bn, an increase of eight per cent, while its business and private banking division’s cash profit rose by nine per cent to $A960m.

CORPORATES
COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, AUSTRALIA. ATTORNEY-GENERAL’S DEPT. AUSTRALIAN TRANSACTION REPORTS AND ANALYSIS CENTRE, ARGO INVESTMENTS LIMITED – ASX ARG, PERENNIAL INVESTMENT PARTNERS LIMITED

Choice urges Hayne focus on unfair fees

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Original article by Jonathan Shapiro
The Australian Financial Review – Page: 15 : 8-Feb-18

Consumer group Choice has used its submission to the banking royal commission to urge the inquiry to examine issues such as the use of trailing commissions in the financial services sector and the methods used to calculate fees and charges. Choice has argued that unfair fees is a key issue that the general public would like the royal commission to address. Choice has also criticised the financial services industry’s self-regulation regime, noting the shortcomings of self-regulation for insurers in particular.

CORPORATES
AUSTRALIAN CONSUMERS’ ASSOCIATION, AUSTRALIA. ROYAL COMMISSION INTO MISCONDUCT IN THE BANKING, SUPERANNUATION AND FINANCIAL SERVICES INDUSTRY

Lib MP growls over layer of BEAR red tape

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Original article by Phillip Coorey
The Australian Financial Review – Page: 4 : 6-Feb-18

The Greens will seek amendments to the Federal Government’s Banking Executive Accountability Regime in the Senate, after the legislation was passed by the lower house on 5 February. Liberal MP Nicolle Flint opposed the BEAR regime, arguing that it will further increase the compliance burden for the financial sector, noting that it has been subject to a spate of new rules and regulations in recent years. The BEAR regime, which is slated to take effect in July, has the support of the Australian Labor Party.

CORPORATES
LIBERAL PARTY OF AUSTRALIA, AUSTRALIAN GREENS, AUSTRALIAN LABOR PARTY, AUSTRALIA. DEPT OF THE TREASURY

Why the RBA will hike interest rates

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Original article by Karen Maley
The Australian Financial Review – Page: 30 : 6-Feb-18

Ellerston Capital’s Tim Toohey expects the Reserve Bank to increase official interest rates by 125 basis points over the next three years, beginning in the second half of 2018. He says the prospect of higher interest rates will have relatively little impact on consumers, despite rising household debt, arguing that the net worth of Australian households has risen strongly over the last decade. Meanwhile, he attributes a slump in retail spending in the September 2017 quarter to the Federal Government’s changes in the rules on voluntary superannuation contributions rather than negative consumer sentiment.

CORPORATES
ELLERSTON CAPITAL PTY LTD, RESERVE BANK OF AUSTRALIA

Banks watch as capital city unit crisis unfolds

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Original article by Robert Gottliebsen
The Australian – Page: 21 : 31-Jan-18

The yield on US 10-year government bonds peaked at 2.73 per cent in late January, and the policies of President Donald Trump could see yields rise further. This would have major implications for Australia’s banks, which source 30-40 per cent of their funding from offshore. Australian banks are in turn heavily exposed to the residential and retail property markets, and a sharp rise in global interest rates would put downward pressure on asset values in these sectors. This would be of particular concern for the inner city apartment markets in Melbourne, Sydney and Brisbane, where there are already fears of an oversupply.

CORPORATES
UNITED STATES. EXECUTIVE OFFICE OF THE PRESIDENT, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA

Satisfaction with banks up in December

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Original article by Roy Morgan
Market Research Update – Page: Online : 31-Jan-18

New research from Roy Morgan shows that customer satisfaction with banks in the six months to December 2017 was 80.8%, up from 80.6% in November. Despite many fluctuations in satisfaction over the last two decades, the current result represents a continuation of the generally positive trend that we have seen since 2001, when satisfaction with banks was only 58.5%. The Commonwealth Bank had the highest customer satisfaction rating of the big four in December (unchanged at 79.6%), followed by NAB (up 0.3% to 78.6%). However, Bendigo Bank (up 0.7% to 88.8%) had the highest customer satisfaction rating among the 10 largest consumer banks.

CORPORATES
ROY MORGAN LIMITED, 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, BENDIGO BANK, BANK OF QUEENSLAND LIMITED – ASX BOQ, ING BANK (AUSTRALIA) LIMITED, BANK OF WESTERN AUSTRALIA LIMITED, ST GEORGE BANK LIMITED, SUNCORP BANK

Minefield for new CBA boss

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Original article by Glenda Korporaal, Michael Roddan
The Australian – Page: 1 & 6 : 30-Jan-18

The head of the Commonwealth Bank of Australia’s retail banking division, Matt Comyn, will succeed Ian Narev as CEO in April. His remuneration will be 15 per cent lower, with a base salary of $A2.2m plus short-term and long-term incentives. Comyn’s appointment follows a global search for Narev’s successor, and CBA chair Catherine Livingstone says Comyn had the board’s full support. CBA’s retail banking division has attracted scrutiny over a money-laundering scandal, but Livingstone stresses that it was a company-wide issue.

CORPORATES
COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, AUSTRALIA. ATTORNEY-GENERAL’S DEPT. AUSTRALIAN TRANSACTION REPORTS AND ANALYSIS CENTRE, AUSTRALIA. ROYAL COMMISSION INTO MISCONDUCT IN THE BANKING, SUPERANNUATION AND FINANCIAL SERVICES INDUSTRY, FINANCE SECTOR UNION, BERRILL AND WATSON, COMMINSURE

Stronger $A a bump for RBA rate hike

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Original article by Patrick Durkin
The Australian Financial Review – Page: 26 : 29-Jan-18

The Australian dollar rose above $US0.81 in offshore trading on the weekend of 27-28 January, extending its gains since early December to eight per cent. Factors such as a falling US dollar and strengthening commodity prices have contributed to the Australian currency’s recent rally. However, the dollar’s rise may affect the timing of any change in official interest rates. Meanwhile, Citigroup expects the currency to be trading at around its current level at the end of 2018, although Westpac anticipates a fall of around $US0.09.

CORPORATES
CITIGROUP PTY LTD, WESTPAC BANKING CORPORATION – ASX WBC, AMP LIMITED – ASX AMP, RESERVE BANK OF AUSTRALIA, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, UNITED STATES. FEDERAL RESERVE BOARD

ASIC slams banks over funds failure

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Original article by Michael Roddan
The Australian – Page: 15 & 18 : 25-Jan-18

A review of the financial advice industry by the Australian Securities & Investments Commission has focused on the four major banks and AMP, which collectively dominate the sector. The review concluded that there is a high level of non-compliance with laws requiring financial advisers to act in the best interests of their clients, with a majority of financial advisers recommending the banks’ own financial products rather than other ones on their approved product list. Financial planners will be subject to greater transparency with regard to approved product lists as a result of the review.

CORPORATES
AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION, 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, AMP LIMITED – ASX AMP, FINANCIAL SERVICES COUNCIL, INDUSTRY SUPER AUSTRALIA PTY LTD, AUSTRALIAN GREENS, AUSTRALIAN CONSUMERS’ ASSOCIATION