K: Financial and Insurance Services

Future Fund wary as economy holds up

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Original article by Jonathan Shapiro
The Australian Financial Review – Page: 17 & 31 : 30-Aug-18

The Future Fund has posted a 2017-18 return of 9.3 per cent for 2017-18, compared with its targeted return of 6.1 per cent a year. It has achieved a return of 8.7 per cent each year over the last decade. Meanwhile, the Future Fund has reduced its cash holdings in the last year, while its exposure to Australian shares and the private equity sector has increased. MD David Neal says asset prices are likely to fall when synchronised global economic growth comes to an end, while chairman Peter Costello says the tariff war will also affect asset prices.

CORPORATES
AUSTRALIA. FUTURE FUND MANAGEMENT AGENCY

CBA may need a rethink on dividend

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Original article by Sarah Turner
The Australian Financial Review – Page: 31 : 30-Aug-18

Analysts suggest that the Commonwealth Bank may have to reduce its dividend payout if it proceeds with the demerger of CFS Group. Shareholders received a total dividend of $4.31 per share for the 2017-18 financial year, but Richard Wiles of Morgan Stanley estimates that this could fall to around $4 per share if its wealth management and mortgage broking assets are demerged. However, Andrew Martin of Alphinity Investment Management does not expect the bank to reduce its dividend in the near-term.

CORPORATES
COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, CFS GROUP, MORGAN STANLEY AUSTRALIA LIMITED, ALPHINITY INVESTMENT MANAGEMENT PTY LTD, JP MORGAN AUSTRALIA LIMITED, CLIME ASSET MANAGEMENT PTY LTD, PLATYPUS ASSET MANAGEMENT PTY LTD, WESTPAC BANKING CORPORATION – ASX WBC

Costello slams ASIC for banks’ appalling acts

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Original article by Joanna Mather, Jonathan Shapiro
The Australian Financial Review – Page: 11 : 30-Aug-18

Future Fund chairman Peter Costello says the banking royal commission should look into the failings of the Australian Securities & Investments Commission in responding to misconduct in the financial services sector. The former federal treasurer argues that while the misconduct of banks has been appalling, ASIC bears some responsibility for allowing it to occur. Costello forecasts that the royal commission will result in lower profits in the banking sector, while financial advice will cost more and it will become harder to obtain credit.

CORPORATES
AUSTRALIA. FUTURE FUND MANAGEMENT AGENCY, AUSTRALIA. ROYAL COMMISSION INTO MISCONDUCT IN THE BANKING, SUPERANNUATION AND FINANCIAL SERVICES INDUSTRY, RESERVE BANK OF AUSTRALIA, WESTPAC BANKING CORPORATION – ASX WBC

Rates on the rise: Westpac takes first shot with interest hike

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Original article by Michael Roddan, Adam Creighton
The Australian – Page: 1 & 2 : 30-Aug-18

Sally Tindall of RateCity expects Westpac’s major rivals to quickly follow its lead in announcing an increase in its mortgage interest rates. Westpac has cited higher funding costs for its decision to increase the rates on interest-only and principal-and-interest loans for owner-occupiers and property investors from 19 September. Westpac CEO Brian Hartzer says the bank is of the view that higher funding costs are likely to be sustained for some time. The Reserve Bank has not increased official interest rates since August 2016.

CORPORATES
WESTPAC BANKING CORPORATION – ASX WBC, RATECITY PTY LTD, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, AUSTRALIA. ROYAL COMMISSION INTO MISCONDUCT IN THE BANKING, SUPERANNUATION AND FINANCIAL SERVICES INDUSTRY, RESERVE BANK OF AUSTRALIA, MACQUARIE GROUP LIMITED – ASX MQG, BENDIGO AND ADELAIDE BANK LIMITED – ASX BEN, AMP BANK LIMITED, BANK OF QUEENSLAND LIMITED – ASX BOQ, ING DIRECT, ME BANK, SUNCORP BANK, CITIGROUP PTY LTD, BEYOND BANK AUSTRALIA, AUSWIDE BANK LIMITED – ASX ABA, MYSTATE LIMITED – ASX MYS, QBANK, AUSTRALIA. DEPT OF THE TREASURY, AUSTRALIA. FUTURE FUND MANAGEMENT AGENCY, AUSTRALIAN LABOR PARTY

ASIC warns CBA on reverse mortgages

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Original article by James Eyers
The Australian Financial Review – Page: 19 : 29-Aug-18

Lending standards in the reverse mortgage sector have come under scrutiny by the Australian Securities & Investments Commission, which has expressed concern that some lenders have adopted a "tick the box" approach to approving such loans. The Commonwealth Bank and its Bankwest subsidiary are the leading providers of reverse mortgages, which tend to be popular with older people. Demand for such products is expected to increase due to Australia’s ageing population.

CORPORATES
AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, BANKWEST, WESTPAC BANKING CORPORATION – ASX WBC, MACQUARIE GROUP LIMITED – ASX MQG, HEARTLAND SENIORS FINANCE, AUSTRALIA. PRODUCTIVITY COMMISSION

APRA prepares to approve three new banks

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Original article by James Eyers
The Australian Financial Review – Page: 26 : 28-Aug-18

There is speculation that the Australian Prudential Regulation Authority could grant full banking licences to fintech start-ups Volt Bank, 86400 and Judo Capital by the end of 2018. They would be subject to the same capital requirements as other banks, while gaining the trust of consumers will be a challenge. However, they should benefit from a lack of legacy IT systems and branch networks, as well as negative sentiment toward traditional banks in the wake of the royal commission.

CORPORATES
AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY, VOLT BANK LIMITED, 86400 PTY LTD, JUDO CAPITAL PTY LTD, AUSTRALIA. ROYAL COMMISSION INTO MISCONDUCT IN THE BANKING, SUPERANNUATION AND FINANCIAL SERVICES INDUSTRY, AUSTRALIA. DEPT OF THE PRIME MINISTER AND CABINET, AUSTRALIA. DEPT OF THE TREASURY

NAB operations boss quits as Baird firms for top job

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Original article by James Eyers
The Australian Financial Review – Page: 15 & 18 : 28-Aug-18

Former New South Wales premier Mike Baird is now regarded as the leading internal candidate to eventually succeed National Australia Bank CEO Andrew Thorburn. COO Antony Cahill had been seen as a potential successor, but he will leave the bank in mid-September to take up a role at Visa in the UK. Andrew Hagger was also regarded as a contender to replace Thorburn, but he attracted scrutiny by the banking royal commission over the fee-for-no-service scandal. External candidates are said to include former Westpac executive Jason Yetton.

CORPORATES
NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, VISA INTERNATIONAL, AUSTRALIA. ROYAL COMMISSION INTO MISCONDUCT IN THE BANKING, SUPERANNUATION AND FINANCIAL SERVICES INDUSTRY, WESTPAC BANKING CORPORATION – ASX WBC, SOCIETYONE AUSTRALIA PTY LTD, MLC LIMITED, PERPETUAL LIMITED – ASX PPT

A whiff of optimism behind PE expanders

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Original article by David Rogers
The Australian – Page: 27 : 28-Aug-18

The average forward price-earnings multiple of the 25 most expensive stocks in the S&P/ASX 300 has risen by 9.8 per cent since these companies reported their latest financial results, while the PE multiple of the indice’s 25 cheapest stocks has contracted. Jason Steed of JP Morgan has attributed the PE expansion to factors such as momentum buying, short covering, deployment of high cash balances and the recent political uncertainty. Meanwhile, Steed notes that 30 per cent of the stocks that JP Morgan covers have exceeded expectations during the August reporting season, while 28 per cent have failed to meet expectations.

CORPORATES
STANDARD AND POOR’S ASX 300 INDEX, JP MORGAN AUSTRALIA LIMITED, DOMINO’S PIZZA ENTERPRISES LIMITED – ASX DMP, MONADELPHOUS GROUP LIMITED – ASX MND, COCHLEAR LIMITED – ASX COH, COCA-COLA AMATIL LIMITED – ASX CCL, TPG TELECOM LIMITED – ASX TPM, REA GROUP LIMITED – ASX REA, MYER HOLDINGS LIMITED – ASX MYR, APA GROUP – ASX APA, CHEUNG KONG INFRASTRUCTURE HOLDINGS LIMITED, HUAWEI TECHNOLOGIES COMPANY LIMITED, ZTE CORPORATION, DEUTSCHE BANK AG

ASX looks steady as earnings draw to a close

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Original article by Sarah Turner
The Australian Financial Review – Page: 22 : 27-Aug-18

Futures pricing suggests that the Australian sharemarket will drift lower when trading resumes on 27 August. The leadership crisis in Canberra weighed on investors in the previous week, with the S&P/ASX 200 shedding 1.5 per cent. However, US markets posted solid gains for the week, with the S&P 500 officially recording its longest bull run on record.

CORPORATES
STANDARD AND POOR’S ASX 200 INDEX, STANDARD AND POOR’S 500 INDEX, DOW JONES INDUSTRIAL AVERAGE INDEX, NASDAQ COMPOSITE INDEX, UNITED STATES. FEDERAL RESERVE BOARD, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, PEOPLE’S BANK OF CHINA, CITIGROUP PTY LTD, AUSTRALIA. DEPT OF THE PRIME MINISTER AND CABINET

Exposure was good for banks: Elliott

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Original article by Richard Gluyas
The Australian – Page: 21 : 24-Aug-18

ANZ Bank CEO Shayne Elliott has no regrets about his involvement in calling for the financial services royal commission, even though the evidence it has presented has been "confronting". The CEOs and chairmen of the major banks urged Treasurer Scott Morrison to hold the inquiry in a letter sent to him in November 2017. They noted that confidence in the financial system was being hurt by the ongoing speculation about the prospect of a royal commission.

CORPORATES
AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, AUSTRALIA. ROYAL COMMISSION INTO MISCONDUCT IN THE BANKING, SUPERANNUATION AND FINANCIAL SERVICES INDUSTRY, AUSTRALIA. DEPT OF THE TREASURY