K: Financial and Insurance Services

‘Liar loans’ pumped up house prices

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Original article by Jonathan Shapiro
The Australian Financial Review – Page: 1 & 8 : 12-Sep-17

UBS surveyed more than 900 Australian borrowers who had taken out a mortgage loan in the year to August 2017, finding that a third had not been truthful in terms of the information on their application. UBS states that the value of so-called "liar loans" is in excess of $A500 billion, and that these loans pose threats to both the banking sector and the overall economy. The ANZ Bank had the highest number of liar loans in the UBS survey, while respondents were most likely to have understated their expenses on their application.

CORPORATES
UBS HOLDINGS PTY LTD, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, RESERVE BANK OF AUSTRALIA, MOODY’S INVESTORS SERVICE INCORPORATED, MORTGAGE AND FINANCE ASSOCIATION OF AUSTRALIA

CBA eyes bond market return after scandal

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Original article by Jonathan Shapiro
The Australian Financial Review – Page: 15 : 11-Sep-17

The Commonwealth Bank of Australia may make a bond issue in the week beginning 11 September 2017. Australia’s large banks use such issues to help cover the gap between the amount of loans they have outstanding and the value of their deposits. If the CBA does proceed with the bond issue, it will be its first since AUSTRAC announced that it is taking legal action against it over alleged breaches of money-laundering regulations. The CBA raised around $A40 billion in fiscal 2017 from wholesale long-term debt.

CORPORATES
COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, AUSTRALIA. ATTORNEY-GENERAL’S DEPT. AUSTRALIAN TRANSACTION REPORTS AND ANALYSIS CENTRE, WESTPAC BANKING CORPORATION – ASX WBC, TRANSURBAN GROUP LIMITED – ASX TCL, AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY, MOODY’S ANALYTICS AUSTRALIA PTY LTD, ALTIUS ASSET MANAGEMENT PTY LTD, SANTOS LIMITED – ASX STO, WOODSIDE PETROLEUM LIMITED – ASX WPL

Canada has hiked again – will the RBA follow?

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Original article by Patrick Commins
The Australian Financial Review – Page: 28 : 8-Sep-17

Vimal Gor of BT Investment Management says the Bank of Canada’s decision to increase official interest rates for the second time in 2017 has no implications for the Reserve Bank of Australia. However, Annette Beacher of TD Securities says both central banks have expressed similar views on their nations’ respective economies in recent monetary policy statements. Canada and Australia both have low inflation, low growth in wages, high household debt and high exchange rates, but a key difference is Canada’s much stronger growth in real GDP.

CORPORATES
BANK OF CANADA, RESERVE BANK OF AUSTRALIA, BT INVESTMENT MANAGEMENT LIMITED – ASX BTT, TD SECURITIES, ALTIUS ASSET MANAGEMENT PTY LTD, BLOOMBERG LP

Funder backs CBA class action

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Original article by Michael Roddan
The Australian – Page: 23 : 6-Sep-17

Listed litigation fund IMF Bentham has agreed to provide financial backing for a proposed shareholder class action against the Commonwealth Bank of Australia. The major bank’s shares have shed more than 10 per cent since early August, when Austrac initiated legal action over the CBA’s failure to comply with money-laundering laws. The class action is being undertaken by law firm Maurice Blackburn, which estimates that CBA could face a potential payout of at least $A200m. CBA could also incur sanctions in other countries where it has a presence.

CORPORATES
COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, IMF BENTHAM LIMITED – ASX IMF, MAURICE BLACKBURN PTY LTD, AUSTRALIA. ATTORNEY-GENERAL’S DEPT. AUSTRALIAN TRANSACTION REPORTS AND ANALYSIS CENTRE, FEDERAL COURT OF AUSTRALIA, CLSA AUSTRALIA PTY LTD, MORGAN STANLEY AUSTRALIA LIMITED, WESTPAC BANKING CORPORATION – ASX WBC

Citi tips ‘attractive’ return on stocks

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Original article by James Thomson
The Australian Financial Review – Page: 35 : 6-Sep-17

Data from Citigroup shows that the earnings of Australian-listed companies increased by 17.8 per cent in 2016-17, although growth was just 4.3 per cent when resources stocks are excluded. Earnings are forecast to rise by 3.4 per cent overall in 2017-18, although Tony Brennan of Citigroup notes that growth could be around 10 per cent when dividends are taken into account. Meanwhile, UBS expects earnings growth of 3.5 per cent overall. Citigroup also forecasts that the S&P/ASX 200 could potentially rise by 12 per cent in 2017-18.

CORPORATES
CITIGROUP PTY LTD, UBS HOLDINGS PTY LTD, STANDARD AND POOR’S ASX 200 INDEX, SUNCORP GROUP LIMITED – ASX SUN, PRIMARY HEALTH CARE LIMITED – ASX PRY, AMP LIMITED – ASX AMP, COMPUTERSHARE LIMITED – ASX CPU, QANTAS AIRWAYS LIMITED – ASX QAN, BHP BILLITON LIMITED – ASX BHP, CALTEX AUSTRALIA LIMITED – ASX CTX

Stability for Lowe’s first year at helm

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Original article by Philip Baker
The Australian Financial Review – Page: 36 : 6-Sep-17

Official interest rates have remained unchanged at 1.5 per cent during Philip Lowe’s first year as Reserve Bank of Australia governor. In contrast, the cash rate rose by 0.5 per cent during the first 12 months’ tenure of his predecessor, Glenn Stevens. Meanwhile, the next change in monetary policy is likely to be a rise in interest rates, although a number of economic indicators suggest that rates may stay on hold until late 2018.

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

Kim’s bomb the bleak balance for the upbeat

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Original article by Vesna Poljak
The Australian Financial Review – Page: 20 : 4-Sep-17

Shane Oliver of AMP Capital says there is potential for equity markets to experience a correction, although this could depend on the response to North Korea’s test of a hydrogen bomb. Meanwhile, Oliver says profit growth in Australia remains significantly lower than in the US, Europe and Japan. He anticipates GDP growth of 0.5 per cent for the quarter and 1.5 per cent growth year-on-year. A survey by Bloomberg shows that the general consensus is for GDP growth of 0.7 per cent for the quarter and 1.8 per cent for the year to June.

CORPORATES
AMP CAPITAL INVESTORS LIMITED, RESERVE BANK OF AUSTRALIA, BETASHARES CAPITAL LIMITED, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB

‘Good debt’ to underwrite Future Fund

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Original article by Andrew White
The Australian – Page: 19 & 22 : 1-Sep-17

The Future Fund has posted an annual return of 8.7 per cent for 2016-17, compared with its target return of 6.9 per cent. However, chairman Peter Costello says returns and asset values are likely to be affected by an expected rise in interest rates. He adds that the Federal Government’s decision to postpone drawdowns by five years will allow the sovereign wealth fund to cover all unfunded public sector super liabilities, which are forecast to top $A200bn in 2021. The Government will increase what Treasurer Scott Morrison labels "good" debt to fund super liabilities between 2021 and 2026.

CORPORATES
AUSTRALIA. FUTURE FUND MANAGEMENT AGENCY, AUSTRALIA. DEPT OF THE TREASURY, UNIVERSITY OF TASMANIA, QIC LIMITED, PORT OF MELBOURNE

Banks use rules to stifle rivals: Morrison

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Original article by James Eyers
The Australian Financial Review – Page: 21 : 1-Sep-17

Federal Treasurer Scott Morrison says changes to the banking sector’s regulatory regime are needed as established banks are using the existing rules to stymie competition and make it hard for new players to enter the market. He has told a Bloomberg forum that the Federal Government’s proposed regulatory changes are aimed at empowering bank customers. Morrison has also ruled out making the Banking Executive Accountability Regime retrospective.

CORPORATES
AUSTRALIA. DEPT OF THE TREASURY, AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION, AUSTRALIA. PRODUCTIVITY COMMISSION, BLOOMBERG LP, AUSTRALIA. ATTORNEY-GENERAL’S DEPT. AUSTRALIAN TRANSACTION REPORTS AND ANALYSIS CENTRE, AUSTRALIAN LABOR PARTY

Time is past for banks royal commission policy

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Original article by David Crowe
The Australian – Page: 2 : 1-Sep-17

Australian banks are attracting increased regulatory scrutiny in the wake of the Commonwealth Bank’s money-laundering scandal. This has weakened the Australian Labor Party’s case for a royal commission into banks, as such an inquiry would take some time to set up if Labor wins the next federal election. Meanwhile, Labor may not be able to act on the inquiry’s recommendations until after the following election. Labor increased the Australian Securities & Investments Commission’s regulatory powers when it was previously in government, and it could so again without the need for a royal commission.

CORPORATES
AUSTRALIAN LABOR PARTY, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION, AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY, AUSTRALIA. ATTORNEY-GENERAL’S DEPT. AUSTRALIAN TRANSACTION REPORTS AND ANALYSIS CENTRE