K: Financial and Insurance Services

Super hit in $50bn plunge

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Original article by David Rogers, James Kirby
The Australian – Page: 1 & 2 : 26-Oct-18

The S&P/ASX 200 has shed almost seven per cent so far in 2018, including a fall of 10.8 per cent since August. The big sell-down on 25 October will impact on superannuation funds’ returns, with balanced funds having lost about 2.5 per cent so far in 2018-19. SuperRatings MD Jeff Bresnahan says most super fund members who have chosen the balanced option can expect the value of their super to fall by around four per cent in response to the sell-off.

CORPORATES
STANDARD AND POOR’S ASX 200 INDEX, SUPERRATINGS PTY LTD, DOW JONES INDUSTRIAL AVERAGE INDEX, NASDAQ COMPOSITE INDEX, NIKKEI 225 INDEX, SHANGHAI COMPOSITE INDEX, BELL POTTER SECURITIES LIMITED, AMP LIMITED – ASX AMP, NETFLIX INCORPORATED, FACEBOOK INCORPORATED, ALPHABET INCORPORATED, GOOGLE INCORPORATED, XERO LIMITED – ASX XRO, AFTERPAY TOUCH GROUP LIMITED – ASX APT, WISETECH GLOBAL LIMITED – ASX WTC, AUSTRALIA. FUTURE FUND MANAGEMENT AGENCY, CORELOGIC AUSTRALIA PTY LTD

$19b in property loans breach new rules

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Original article by Duncan Hughes
The Australian Financial Review – Page: 21 : 25-Oct-18

Analysis by the Australian Prudential Regulation Authority shows that mortgage lenders approved $19bn worth of loans in the year to September that do not meet their revised lending criteria. This is $9b higher than the previous year, with major lenders recording the biggest growth in such loans. Martin North of Digital Finance Analytics says it is a concern that banks are not complying with their own rules regarding the ability of customers to service their loans. APRA notes that the new rules allow lenders to take into account exceptional circumstances when assessing a home loan application.

CORPORATES
AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY, DIGITAL FINANCE ANALYTICS, SUNCORP BANK, SUNCORP GROUP LIMITED – ASX SUN, AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION, AUSTRALIA. PRODUCTIVITY COMMISSION, AUSTRALIA. ROYAL COMMISSION INTO MISCONDUCT IN THE BANKING, SUPERANNUATION AND FINANCIAL SERVICES INDUSTRY

Why there is a silver lining in bear markets

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Original article by David Rogers
The Australian – Page: 26 : 24-Oct-18

Global sharemarkets fell on 23 October, and Wall Street is one of the few markets that are still in positive territory for the year. Tobias Levkovich, the chief US equity strategist at Citigroup, notes that investors have become more focused on risk following the recent sell-off on Wall Street. He says the outlook for the US market remains encouraging until at least the middle of 2019, arguing that a major fall on Wall Street would require US corporate profits to fall sharply. He adds that US companies’ profit margins remain lower than in 2009.

CORPORATES
CITIGROUP INCORPORATED, STANDARD AND POOR’S ASX 200 INDEX, UNITED STATES. EXECUTIVE OFFICE OF THE PRESIDENT, JP MORGAN AND COMPANY INCORPORATED

Macquarie scraps stockbroker commissions to tackle conflicts

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Original article by Joyce Moullakis, Samantha Bailey
The Australian – Page: 17 & 28 : 23-Oct-18

Macquarie Group has advised that it will abolish commission payments for its stockbroking advisers and move to a salary and profit share remuneration system from April 2019. Commissions were criticised by former Commonwealth Bank CEO and current AMP chairman David Murray in his Financial System Inquiry as causing the potential for conflicts of interest. However, Macquarie’s decision may not please all brokers and could lead to the departure of some staff.

CORPORATES
MACQUARIE GROUP LIMITED – ASX MQG, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, AMP LIMITED – ASX AMP, CREDIT SUISSE (AUSTRALIA) LIMITED, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, JBWERE LIMITED, MORGAN STANLEY AUSTRALIA LIMITED, CRESTONE WEALTH MANAGEMENT LIMITED

‘We’re in the eighth inning’: Oaktree chief wary of bull run

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Original article by David Rogers
The Australian – Page: 17 & 28 : 23-Oct-18

Oaktree Capital Management’s co-founder Howard Marks says current financial market conditions favour a defensive investment style. Marks warns that although the bull market may continue for some time yet, the chances of a bear market are increasing. He describes quantitative easing in the wake of the global financial crisis as a "massive experiment" that succeeded, but he says the impact of quantitative tightening is uncertain.

CORPORATES
OAKTREE CAPITAL MANAGEMENT LLC, CITICORP, STANDARD AND POOR’S 500 INDEX, SHANGHAI COMPOSITE INDEX, MSCI EMERGING MARKETS INDEX

US fundamentals strong despite correction

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Original article by David Rogers
The Australian – Page: 18 : 22-Oct-18

The S&P 500 recently shed nearly eight per cent, although it has recovered much of the lost ground and remains five per cent higher than at the start of 2018. Kevin Anderson of State Street has downplayed concerns about the recent pullback by US equities, arguing that Wall Street was largely catching up with the bond market and overseas markets. Anderson expects the US sharemarket to rise in 2019 and he is upbeat about the outlook for the US economy, while he forecasts that the Federal Reserve will lift interest rates to about three per cent in 2019.

CORPORATES
STANDARD AND POOR’S 500 INDEX, UNITED STATES. FEDERAL RESERVE BOARD

Whistleblower at Westpac calls out risks

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Original article by James Eyers, John Kehoe
The Australian Financial Review – Page: 8 : 22-Oct-18

An unnamed risk manager at Westpac has claimed that he was bullied and ignored after he voiced concerns about deficiencies in regard to a technology project. He has reported the matter to WorkSafe New South Wales and the Australian Prudential Regulation Authority. The risk manager says his performance reviews appeared to have suffered as a result of his raising concerns about the technology project, and that his treatment was evidence of a poor risk culture at Westpac.

CORPORATES
WESTPAC BANKING CORPORATION – ASX WBC, WORKSAFE NEW SOUTH WALES, AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB

‘Fluff and fail’: shameful report card for banks

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Original article by James Frost
The Australian Financial Review – Page: 19 : 19-Oct-18

Research by UK-based Lafferty Global has concluded that Australia’s major banks are underperforming their international peers when assessed using a range of qualitative and quantitative measures. The Commonwealth Bank had a rating of three stars out of five, while its three main rivals all had a two-star rating. Bendigo Bank and the Bank of Queensland also had three-star ratings. Lafferty Global founder Michael Lafferty says all of the "big four" banks had a zero rating for culture and digital dependability.

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, LAFFERTY GROUP LIMITED, BENDIGO BANK, BANK OF QUEENSLAND LIMITED – ASX BOQ

Satisfaction with banks declines during Finance Royal Commission – Big four hit hardest

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Original article by Roy Morgan
Market Research Update – Page: Online : 19-Oct-18

New results from Roy Morgan shows that bank customer satisfaction has declined from 81.2% in the six months to January 2018, prior to the Finance Royal Commission, to 78.5% in the six months to September 2018. This decline of 2.7% points was mainly due to a drop in satisfaction of 3.6% points (to 75.6%) for the big four banks, compared to an overall decline of only 0.7% points for all other banks (to 84.2%). Among the 10 largest consumer banks, Bendigo Bank has the highest satisfaction with 88.8%, followed by ING (88.0%) and Bank of Queensland (87.2%). The best of the big four is the CBA on 77.1%, followed by NAB (75.3%). The most positive movers in satisfaction ratings since the Royal Commission are ING (up 2.8%) and Bank of Queensland (up 1.4%). All of the big four banks have shown declines in satisfaction over the period, with Westpac showing the greatest decline, down by 5.0% to 72.9%. Roy Morgan’s "Customer Satisfaction-Consumer Banking in Australia September Report" is based on in-depth interviews conducted face-to-face with over 50,000 consumers per annum in their homes, including over 4,000 bank customers per month.

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

Payday lenders to face probe

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Original article by Michael Roddan
The Australian – Page: 21 : 18-Oct-18

The Senate will undertake an inquiry into payday lenders and short-term credit providers after the proposed probe was backed by the Greens and Centre Alliance. Payday lenders and so-called "buy now, pay later" credit providers were excluded from the financial services royal commission’s terms of reference. Shares in Afterpay Touch Group, Zip Co and Cash Converters fell sharply in response to news of the inquiry.

CORPORATES
AFTERPAY TOUCH GROUP LIMITED – ASX APT, ZIP CO LIMITED – ASX Z1P, CASH CONVERTERS INTERNATIONAL – ASX CCV, CREDIT CORP GROUP LIMITED – ASX CCP, AUSTRALIA. SENATE STANDING COMMITTEE ON ECONOMICS, AUSTRALIAN GREENS, CENTRE ALLIANCE, AUSTRALIA. ROYAL COMMISSION INTO MISCONDUCT IN THE BANKING, SUPERANNUATION AND FINANCIAL SERVICES INDUSTRY, THORN GROUP LIMITED – ASX TGA, RADIO RENTALS, NIMBLE PTY LTD, AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION, AUSTRALIAN LABOR PARTY