K: Financial and Insurance Services

Despite the gloom, this is the best reporting season in years

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Original article by Patrick Commins
The Australian Financial Review – Page: 11 & 26 : 29-Aug-17

Financial market analysts argue that negative perceptions of the August 2017 reporting season are not justified. Jason Steed of JP Morgan notes that 123 stocks in the S&P/ASX 200 Index have risen so far in August, while he adds that investors’ perceptions of the reporting season are often influenced by a handful of stocks that post large declines in the wake of their earnings results. Hasan Tevfik of Credit Suisse says the capital expenditure intentions of ASX 200 companies also demonstrates the strength of the reporting season.

CORPORATES
STANDARD AND POOR’S ASX 200 INDEX, JP MORGAN AUSTRALIA LIMITED, CREDIT SUISSE (AUSTRALIA) LIMITED, BLUESCOPE STEEL LIMITED – ASX BSL, HEALTHSCOPE LIMITED – ASX HSO, INSURANCE AUSTRALIA GROUP LIMITED – ASX IAG, QBE INSURANCE GROUP LIMITED – ASX QBE, SUNCORP GROUP LIMITED – ASX SUN, TELSTRA CORPORATION LIMITED – ASX TLS, FORTESCUE METALS GROUP LIMITED – ASX FMG, WOODSIDE PETROLEUM LIMITED – ASX WPL

Home loan borrowers snub banks

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Original article by Michael Bleby
The Australian Financial Review – Page: 17 : 25-Aug-17

Mortgage Choice has reported a 2016-17 net profit of $A22.2 million, up 13.5 per cent. Mortgage Choice’s shares were trading up three per cent at $A2.36 on the back of its result, while it declared a fully franked dividend of $A0.09 per share. Mortgage Choice’s loan book rose by 3.2 per cent to $A53.4 billion over the year, while CEO John Flavell commented that non-bank lenders had increased their share of Australia’s home loan market over the period.

CORPORATES
MORTGAGE CHOICE LIMITED – ASX MOC, AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY, MACQUARIE SECURITIES PTY LTD

CBA faces $200m-plus class action

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Original article by Ben Butler, Michael Roddan
The Australian – Page: 17 & 21 : 24-Aug-17

Investors who bought shares in the Commonwealth Bank of Australia between 17 August 2015 and 3 August 2017 will be eligible to participate in a proposed class action over the bank’s money-laundering scandal. CBA’s share price has fallen by six per cent since Austrac filed legal action on 3 August, slashing the bank’s market capitalisation by around $A8bn. Maurice Blackburn’s class action is expected to focus on CBA’s disclosures regarding Austrac’s investigation into the money-laundering allegations.

CORPORATES
COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, AUSTRALIA. ATTORNEY-GENERAL’S DEPT. AUSTRALIAN TRANSACTION REPORTS AND ANALYSIS CENTRE, MAURICE BLACKBURN PTY LTD, IMF BENTHAM LIMITED – ASX IMF, FEDERAL COURT OF AUSTRALIA, COMMINSURE, AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION, VELOCITY TRADE LIMITED, FITCH RATINGS LIMITED

Two strikes rule reining in exec pay

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Original article by Joanna Mather
The Australian Financial Review – Page: 3 : 24-Aug-17

The Australian Council of Superannuation Investors has released the findings of a survey which shows that the top listed companies have not significantly increased their CEOs’ salaries in the last 10 years. The annual fixed pay of S&P/ASX 100 CEOs has been steady at about $A1.9m, while bonuses have also been relatively steady. ACSI CEO Louise Davidson notes that the trend has coincided with the introduction of the "two strikes" rule.

CORPORATES
AUSTRALIAN COUNCIL OF SUPERANNUATION INVESTORS INCORPORATED, STANDARD AND POOR’S 500 INDEX, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, DOMINO’S PIZZA ENTERPRISES LIMITED – ASX DMP, CHALLENGER LIMITED – ASX CGF, MACQUARIE GROUP LIMITED – ASX MQG, JAMES HARDIE INDUSTRIES PLC – ASX JHX, WESTFIELD CORPORATION – ASX WFD, PREMIER INVESTMENTS LIMITED – ASX PMV, BT INVESTMENT MANAGEMENT LIMITED – ASX BTT, CSL LIMITED – ASX CSL, FORTESCUE METALS GROUP LIMITED – ASX FMG, QANTAS AIRWAYS LIMITED – ASX QAN

Wild ride for majors as profit season unfolds

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Original article by David Rogers
The Australian – Page: 27 : 24-Aug-17

The August 2017 reporting season has prompted large movements in the shares of some blue-chip stocks. Data from Bloomberg shows that 30 companies in the benchmark S&P/200 Index have experienced share price movements of at least five per cent on the day their latest financial results were released. AMP Capital’s Shane Oliver notes that a similar number of stocks have outperformed and underperformed the market, although investors have tended to react more savagely than usual to stocks that failed to meet earnings expectations.

CORPORATES
STANDARD AND POOR’S ASX 200 INDEX, AMP CAPITAL INVESTORS LIMITED, BLOOMBERG LP, DOMINO’S PIZZA ENTERPRISES LIMITED – ASX DMP, TELSTRA CORPORATION LIMITED – ASX TLS, HEALTHSCOPE LIMITED – ASX HSO, ACONEX LIMITED – ASX ACX, INSURANCE AUSTRALIA GROUP LIMITED – ASX IAG, SIRTEX MEDICAL LIMITED – ASX SRX, WOOLWORTHS LIMITED – ASX WOW, MONADELPHOUS GROUP LIMITED – ASX MND, THE A2 MILK COMPANY LIMITED – ASX A2M, VIRTUS HEALTH LIMITED – ASX VRT, THE STAR ENTERTAINMENT GROUP LIMITED – ASX SGR, McMILLAN SHAKESPEARE LIMITED – ASX MMS, AVEO GROUP – ASX AOG, BEACH POINT CAPITAL MANAGEMENT LP, SEVEN GROUP HOLDINGS LIMITED – ASX SVW, FORTESCUE METALS GROUP LIMITED – ASX FMG, MACQUARIE GROUP LIMITED – ASX MQG

APRA can’t be enforcer and supervisor, NAB says

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Original article by James Eyers
The Australian Financial Review – Page: 13 & 16 : 23-Aug-17

Banks have raised concerns about the proposed Banking Executive Accountability Regime (BEAR) in submissions to the Federal Government. The role of the Australian Prudential Regulation Authority under the new regime is a particular concern for the banking sector, given that it will have powers to fine banks up to $A200m for non-compliance. National Australia Bank has questioned the appropriateness of APRA having the dual roles of supervising and regulating the bank sector, while the ANZ Bank said more clarity is needed regarding the roles of APRA and the Australian Securities & Investments Commission under the BEAR reforms.

CORPORATES
NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY, AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, WESTPAC BANKING CORPORATION – ASX WBC, AUSTRALIAN BANKERS’ ASSOCIATION, AUSTRALIA. DEPT OF THE TREASURY, FINANCE SECTOR UNION, CUSTOMER OWNED BANKING ASSOCIATION, OWNERSHIP MATTERS PTY LTD, AUSTRALIANSUPER PTY LTD

Investor U-turn amid signs the wheels are falling off Trump rally

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Original article by Philip Baker
The Australian Financial Review – Page: 27 : 23-Aug-17

The Dow Jones Industrial Average has gained 18 per cent since the US presidential election in November 2016. However, US investor and hedge fund manager Ray Dalio says the uncertainty surrounding the Trump administration may provide the catalyst for a sharemarket correction. The future of President Donald Trump’s much-touted corporate and personal income tax cuts in particular is uncertain, and a sell-off is likely if the reforms are not passed by Congress.

CORPORATES
DOW JONES INDUSTRIAL AVERAGE INDEX, UNITED STATES. EXECUTIVE OFFICE OF THE PRESIDENT, DEMOCRATIC PARTY (UNITED STATES), REPUBLICAN PARTY (UNITED STATES)

Banks racing to lift their game: Hartzer

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Original article by Michael Roddan, Richard Gluyas
The Australian – Page: 21 : 22-Aug-17

ANZ Bank CEO Shayne Elliott says the Commonwealth Bank’s recent money-laundering problems have impacted the banking sector’s reputation as a whole. He also says the Federal Government’s new regulations governing bank executives are appropriate, as they need to be made accountable for their mistakes. Meanwhile, Westpac CEO Brian Hartzer says the banking major is working hard to ensure that its products, processes and policies are in line with community expectations.

CORPORATES
AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, WESTPAC BANKING CORPORATION – ASX WBC, AUSTRALIA. ATTORNEY-GENERAL’S DEPT. AUSTRALIAN TRANSACTION REPORTS AND ANALYSIS CENTRE

Near enough is good enough in season so far

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Original article by David Rogers
The Australian – Page: 28 : 22-Aug-17

Analysts’ consensus earnings-per-share estimates for 2017-18 have been downgraded by 0.3 per cent so far in the August 2017 reporting season. Hasan Tevfik of Credit Suisse notes that this compares with EPS upgrades of 1.6 per cent in the February reporting season. Meanwhile, just 19 per cent of Australian-listed companies have exceeded consensus earnings estimates so far in the current reporting season, compared with an average of 40 per cent over the last two decades. Likewise, 38 per cent of companies have failed to meet consensus estimates to date, while the historical average is just 28 per cent.

CORPORATES
CREDIT SUISSE (AUSTRALIA) LIMITED, STANDARD AND POOR’S ASX 200 INDEX, GOLDMAN SACHS AUSTRALIA PTY LTD, BLUESCOPE STEEL LIMITED – ASX BSL, BEACH ENERGY LIMITED – ASX BPT, G8 EDUCATION LIMITED – ASX GEM, FORTESCUE METALS GROUP LIMITED – ASX FMG, APN OUTDOOR GROUP LIMITED – ASX APO, TELSTRA CORPORATION LIMITED – ASX TLS, TRANSURBAN GROUP LIMITED – ASX TCL, CSL LIMITED – ASX CSL, DOMINO’S PIZZA ENTERPRISES LIMITED – ASX DMP, AGL ENERGY LIMITED – ASX AGL, FAIRFAX MEDIA LIMITED – ASX FXJ, DOMAIN.COM.AU, CITIGROUP PTY LTD

APRA refines ‘serviceability’ rules for loans

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Original article by Duncan Hughes
The Australian Financial Review – Page: 6 : 21-Aug-17

The Australian Prudential Regulation Authority has directed banks such as Westpac to be more rigorous when it comes to assessing the ability of borrowers to service their loans. Westpac will introduce new measures in this regard from 21 August, with further measures to be adopted in September. APRA’s move on loan serviceability is the latest in a number of measures by it and other regulators aimed at ensuring that borrowers are not taking on too debt and are in a position to repay loans.

CORPORATES
AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY, WESTPAC BANKING CORPORATION – ASX WBC, BANK OF MELBOURNE LIMITED, ST GEORGE BANK LIMITED, BANK OF SOUTH AUSTRALIA LIMITED, RESERVE BANK OF AUSTRALIA, AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION, AMP LIMITED – ASX AMP