K: Financial and Insurance Services

Westpac not wedded to advice arm

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Original article by Joyce Moullakis
The Australian – Page: 17 & 21 : 6-Nov-18

Westpac has posted a cash profit of $8.07bn for the year o 30 September, which is in line with the previous financial year. Its consumer banking division’s earnings were flat, although its business banking arm performed well. Meanwhile, CEO Brian Hartzer says Westpac remains committed to its BT Financial division, although he says the bank may be willing to consider divesting its in-house financial planning business. Westpac boasted 803 salaried and aligned financial planners at the end of the financial year.

CORPORATES
WESTPAC BANKING CORPORATION – ASX WBC, BT FINANCIAL GROUP PTY LTD, AUSTRALIA. ROYAL COMMISSION INTO MISCONDUCT IN THE BANKING, SUPERANNUATION AND FINANCIAL SERVICES INDUSTRY, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, MLC LIMITED, IOOF HOLDINGS LIMITED – ASX IFL, SWITZER DIVIDEND GROWTH FUND (MANAGED FUND) – ASX SWT, MORGAN STANLEY AUSTRALIA LIMITED

Big four feel royal commission fallout

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Original article by Joyce Moullakis, Samantha Bailey
The Australian – Page: 21 : 6-Nov-18

Australia’s four largest banks have reported a combined profit of $29.5bn for 2017-18, which is 5.5 per cent lower than previously. Tim Dring of Ernst & Young notes that the big four banks are facing challenges such as a slowing housing market, customer remediation costs and the impact of the financial services royal commission. However, he adds that the banks are also benefiting from a sharp fall in bad and doubtful debts.

CORPORATES
COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, WESTPAC BANKING CORPORATION – ASX WBC, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, ERNST AND YOUNG, SWITZER DIVIDEND GROWTH FUND (MANAGED FUND) – ASX SWT, KPMG AUSTRALIA PTY LTD, AUSTRALIA. ROYAL COMMISSION INTO MISCONDUCT IN THE BANKING, SUPERANNUATION AND FINANCIAL SERVICES INDUSTRY

Reserve Bank board weigh up trifecta of risks for pre-Cup announcement

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Original article by Jessica Irvine
The Sydney Morning Herald – Page: 9 : 6-Nov-18

The Reserve Bank of Australia is widely expected to leave official interest rates on hold at 1.5 per cent on 6 November. The central bank’s board will consider factors such as subdued wages growth, falling house prices and the high level of household debt in its monetary policy deliberations. The RBA has left the cash rate unchanged on Melbourne Cup Day every year since 2011, and the general consensus of economists is that rates will remain on hold in 2019.

CORPORATES
RESERVE BANK OF AUSTRALIA, WESTPAC BANKING CORPORATION – ASX WBC, MERRILL LYNCH (AUSTRALIA) PTY LTD, HSBC AUSTRALIA HOLDINGS PTY LTD, AUSTRALIAN BUREAU OF STATISTICS, AUSTRALIA. DEPT OF THE TREASURY

NAB goes back to business for growth

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Original article by Joyce Moullakis
The Australian – Page: 17 & 21 : 2-Nov-18

National Australia Bank has posted cash earnings of $5.7bn for 2017-18, which is 14 per cent lower than previously. Cash earnings for the year to 30 September fell by two per cent when restructuring costs and customer remediation charges are excluded. NAB’s consumer and wealth management division’s earnings fell by 5.8 per cent, although its business and private banking division’s earnings rose 2.5 per cent. CEO Andrew Thorburn is upbeat about NAB’s earnings outlook.

CORPORATES
NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, ARNHEM INVESTMENT MANAGEMENT PTY LTD, MLC LIFETIME COMPANY LIMITED, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, MITSUBISHI UFJ FINANCIAL GROUP INCORPORATED, AUSTRALIA. ROYAL COMMISSION INTO MISCONDUCT IN THE BANKING, SUPERANNUATION AND FINANCIAL SERVICES INDUSTRY

Bad bankers to be named and shamed

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Original article by Jeff Whalley
Herald Sun – Page: 26 : 1-Nov-18

Australian Financial Complaints Authority CEO David Locke says the new agency expects to handle 55,000 complaints from consumers and small businesses in its first year. The AFCA has been formed via the merger of the Financial Ombudsman Service, the Superannuation Complaints Tribunal and the Credit & Investments Ombudsman. Locke says he will be more open to "naming and shaming" wrongdoers in the financial services industry than the FOS, noting that the latter was restricted to doing so in annual reports. The number of complaints received by the FOS rose by 10 per cent during its last year of operation.

CORPORATES
AUSTRALIAN FINANCIAL COMPLAINTS AUTHORITY, FINANCIAL OMBUDSMAN SERVICE LIMITED, AUSTRALIA. SUPERANNUATION COMPLAINTS TRIBUNAL, CREDIT AND INVESTMENTS OMBUDSMAN, AUSTRALIA. ROYAL COMMISSION INTO MISCONDUCT IN THE BANKING, SUPERANNUATION AND FINANCIAL SERVICES INDUSTRY

AMP digs in as fresh queries arise over insurance arm sale

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Original article by James Frost
The Australian Financial Review – Page: 15 & 22 : 1-Nov-18

AMP’s acting CEO Mike Wilkins has defended the wealth manager’s $3.45bn deal to sell its life insurance arm, arguing that it is in the best interests of long-term shareholders. He adds that AMP’s board felt that it was appropriate to proceed with the transaction without putting it to a shareholder vote, although Dean Paatsch of proxy advisory firm Ownership Matters believes that the size of the deal means it should have been approved by shareholders. An ASX Limited spokesman has indicated that the deal is unlikely to breach listing rules.

CORPORATES
AMP LIMITED – ASX AMP, OWNERSHIP MATTERS PTY LTD, ASX LIMITED – ASX ASX

ANZ warns of more housing pain to come as profit sinks by 5pc

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Original article by Joyce Moullakis
The Australian – Page: 17 & 21 : 1-Nov-18

The ANZ Bank has posted a 2017-18 cash net profit of $6.49bn, which is five per cent lower than previously. Revenue for the year to 30 September declined by 1.4 per cent and ANZ’s net interest margin fell from 1.99 per cent to 1.87 per cent. CEO Shayne Elliott expects a further downturn in residential property prices, although he adds that the housing market’s fundamentals remain strong and a significant decline is unlikely. ANZ shareholders will receive a final dividend of $0.80 per share, and a full-year payout of $1.60.

CORPORATES
AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, CONCENTRATED LEADERS FUND LIMITED – ASX CLF, CITIGROUP PTY LTD

Mitsubishi in $4.1bn swoop for CBA arm

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Original article by Joyce Moullakis
The Australian – Page: 17 & 21 : 1-Nov-18

Brett Le Mesurier of Shaw & Partners expects the Commonwealth Bank of Australia to return capital to shareholders following a deal to sell its global asset management business. Japan’s Mitsubishi UFJ Financial Group will pay $4.1bn for Colonial First State Global Asset Management, which CBA had previously intended to demerge with its financial planning and mortgage assets. CBA expects to generate a post-tax gain of around $1.5bn from the sale of CFSGAM, while the bank’s common-equity tier-one capital will be boosted by 60 basis points.

CORPORATES
COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, COLONIAL FIRST STATE GLOBAL ASSET MANAGEMENT, MITSUBISHI UFJ FINANCIAL GROUP INCORPORATED, SHAW AND PARTNERS LIMITED, COUNT FINANCIAL LIMITED, FINANCIAL WISDOM LIMITED, AUSSIE HOME LOANS LIMITED, COLONIAL FIRST STATE GROUP LIMITED, MORTGAGE CHOICE LIMITED – ASX MOC, COUNTPLUS LIMITED – ASX CUP, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, MLC LIMITED, WESTPAC BANKING CORPORATION – ASX WBC, SOCIETYONE AUSTRALIA PTY LTD, SUNCORP GROUP LIMITED – ASX SUN, TRIBECA INVESTMENT PARTNERS PTY LTD, MITSUBISHI UFJ TRUST AND BANKING INCORPORATION

Fundies blast AMP over $3.4b fire sale

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Original article by James Frost
The Australian Financial Review – Page: 1 & 22 : 31-Oct-18

Allan Gray Australia and Merlon Capital Partners are among the institutional investors that have criticised AMP’s proposal to divest its life insurance business. They believe that the $3.4bn sale price undervalues the life business, and Merlon has flagged the possibility of seeking an extraordinary general meeting to challenge the deal. Merlon has written to AMP arguing that the deal demonstrates a "reckless disregard" for shareholders’ funds, while Simon Mawhinney of Allan Gray describes it as a "disastrous deal" for AMP’s shareholders.

CORPORATES
AMP LIMITED – ASX AMP, ALLAN GRAY AUSTRALIA PTY LTD, MERLON CAPITAL PARTNERS PTY LTD, MACQUARIE COUNTRYWIDE MANAGEMENT LIMITED, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, RESOLUTION LIFE GROUP LIMITED, AXA ASIA PACIFIC HOLDINGS LIMITED

RBA signals majors near unquestionably strong threshold

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Original article by Adam Creighton
The Australian – Page: 19 & 28 : 31-Oct-18

The Reserve Bank’s assistant governor Michele Bullock has praised the success of measures aimed at increasing the capital ratios of Australian banks. She notes that the four major banks are close to achieving the Australian Prudential Regulation Authority’s "unquestionably strong" capital benchmark. The banks’ capital ratios have increased from eight per cent to 12 per cent since 2013, when measured on a risk-weighted basis. However, Bullock has warned that APRA’s measures may be undermined if the non-bank financial sector’s market share increases.

CORPORATES
RESERVE BANK OF AUSTRALIA, AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY, BANK FOR INTERNATIONAL SETTLEMENTS. BASEL COMMITTEE ON BANKING SUPERVISION, LEHMAN BROTHERS INCORPORATED, BANK OF ENGLAND