K: Financial and Insurance Services

Future Fund lifts returns on back of equities rally

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Original article by Jonathan Shapiro
The Australian Financial Review – Page: 13 : 24-Jan-24

The federal government’s Future Fund has advised that it has posted a return of eight per cent in the year to 31 December. The sovereign wealth fund has in turn reported an annualised return over three years of 7.4 per cent, and 7.6 per cent over five years. The Future Fund’s full-year return for 2023 was boosted by a sharemarket rally in the fourth quarter, which increased the value of its assets by 3.2 per cent. Future Fund chairman Peter Costello says the high inflation environment of the last two years has made it harder for the fund to achieve its mandated return target.

CORPORATES
AUSTRALIA. FUTURE FUND MANAGEMENT AGENCY

Super fund satisfaction improves since low in July 2023 with strong performances from HESTA, Unisuper & CARE Super

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Original article by Roy Morgan
Market Research Update – Page: Online : 24-Jan-24

New data from Roy Morgan’s Superannuation Satisfaction Report shows an overall super fund satisfaction rating of 65.9% in November 2023, an increase of 0.9% points from July (65.0%). However, satisfaction with super funds is still significantly higher than the long-term average of 58.2% from 2007-2023, and also higher than at any time prior to the pandemic years of 2021-22 when the measure was at record highs. Customer satisfaction for Industry Funds is down 1.4% points to 68.2% compared to a year ago, although this is the smallest decline of any of the four super fund categories. Customer satisfaction with Retail Funds has declined by 2.7% points to 58.9%, and this category continues to have clearly the lowest customer satisfaction of any of the four categories. Customer satisfaction for Public Sector Funds has in turn declined by 3.2% points from a year ago to 70.7% – the largest decline for any of the super fund categories. A standout performer over the past year has been Self-Managed Funds, which have increased their customer satisfaction by 1.9% points to 75.8% and clearly the highest customer satisfaction of any of the four super fund categories. This is the highest level of customer satisfaction for Self-Managed Funds since May 2022. The report’s findings are from Roy Morgan Single Source, Australia’s most trusted consumer survey, compiled by in-depth interviews with over 60,000 Australians each year.

CORPORATES
ROY MORGAN LIMITED

Investors caution markets still too bullish on rates

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Original article by Cecile Lefort
The Australian Financial Review – Page: 21 : 24-Jan-24

Financial markets have scaled back their expectations of interest rate cuts from the Reserve Bank of Australia in 2024; the RBA is now expected to reduce the cash rate by 37 basis points over the year, compared with expectations of a 55 basis point cut earlier in January. Tim Van Klaveren of UBS expects two rate cuts in 2024, while Matt Wacher from Morningstar anticipates three rate cuts in response to an economy that he expects to slow quickly. Meanwhile, financial markets have now fully priced in a US interest rate cut in June.

CORPORATES
RESERVE BANK OF AUSTRALIA, UBS HOLDINGS PTY LTD, MORNINGSTAR PTY LTD

Economists warn of unintended fallout from RBA overhaul

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Original article by Cecile Lefort
The Australian Financial Review – Page: 21 : 17-Jan-24

Economists polled by The Australian Financial Review have expressed some reservations with regard to how the Reserve Bank will communicate monetary policy decisions under its new structure. The RBA’s mew Monetary Policy Board will be responsible for setting interest rates; it will publish details of how the board voted on rate decisions, but not the voting records of each board member. Economists contend amongst other things that not diclosing these votes could potentially give rise to speculation of dissension amongst board members when this does not exist.

CORPORATES
RESERVE BANK OF AUSTRALIA

Mortgage stress continued to ease in November despite the RBA raising interest rates on Melbourne Cup Day

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Original article by Roy Morgan
Market Research Update – Page: Online : 17-Jan-24

New research from Roy Morgan shows that 1,490,000 mortgage holders (29.9%) were ‘At Risk’ of ‘mortgage stress’ in the three months to November 2023. This period included only one interest rate increase on Melbourne Cup Day, with the RBA raising interest rates to 4.35%. The figure for November represented a second straight monthly decrease as mortgage stress continued to ease due to a combination of factors – including increased household incomes, increased employment and reduced amounts borrowed and outstanding. This is the first time since January 2022 (before the RBA began raising interest rates) that mortgage stress has decreased for two straight months. However, despite the easing in mortgage stress this was only the sixth time in the history of the index that over 1.45 million mortgage holders were considered ‘At Risk’. The number of Australians ‘At Risk’ of mortgage stress has increased by 683,000 since May 2022 when the RBA began a cycle of interest rate increases. Meanwhile, the number of mortgage holders considered ‘Extremely At Risk’ of mortgage stress is now numbered at 934,000 (19.3% of mortgage holders) which is significantly above the long-term average over the last 10 years of 14.2%. These are the latest findings from Roy Morgan’s Single Source Survey, based on in-depth interviews conducted with over 60,000 Australians each year, including over 10,000 owner-occupied mortgage-holders.

CORPORATES
ROY MORGAN LIMITED

Scams help drive unsustainable increase in complaints about banks, finance firms to AFCA

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Original article by Loretta Florance, Leonie Thorne
abc.net.au – Page: Online : 9-Jan-24

The Australian Financial Complaints Authority has advised that it received over 100,000 complaints in 2023, the most in its five-year history. 8,987 related to scams, up from 4,611 in 2022, and AFCA CEO David Locke says he hopes that 2024 will be the year that anti-scam initiatives by industry and government finally disrupt what he contends is a "serious and organised crime". AFCA’s dispute resolution scheme is intended to be a last resort for consumers, if they cannot get a solution by dealing directly with their bank, but Locke claims the volume of complaints escalated to AFCA is increasing at an "unsustainable rate", and that financial service firms need to do a better job of resolving customer complaints.

CORPORATES
AUSTRALIAN FINANCIAL COMPLAINTS AUTHORITY

Bankers strike $5b in M&A deals

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Original article by Aaron Weinman
The Australian Financial Review – Page: 1 & 14 : 19-Dec-23

Australian investors benefited from a pre-Christmas spike in mergers and acquisitions activity on Monday. Share registry administer Link Group endorsed a $1.2bn buyout offer from Japan’s Mitsubishi UFJ Financial Group and building materials group Adbri advised that it has received a $2.1bn takeover bid from Barro Group and CRH. Dental group Pacific Smiles has in turn been the subject of a $233m takeover offer from Genesis Capital. Ian Holmes from E&P suggest that the end-of-year surge in takeovers may be driven by a desire for suitors to avoid dragging out a bid into the new year.

CORPORATES
LINK ADMINISTRATION HOLDINGS LIMITED – ASX LNK, MITSUBISHI UFJ FINANCIAL GROUP INCORPORATED, ADBRI LIMITED – ASX ABC, BARRO GROUP PTY LTD, CRH PLC, PACIFIC SMILES GROUP LIMITED – ASX PSQ, GENESIS CAPITAL, E&P FINANCIAL GROUP LIMITED – ASX EP1

Bullock: banks should bear more of cost of moving cash

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Original article by James Eyers
The Australian Financial Review – Page: 4 : 13-Dec-23

Australia’s major banks will hold an emergency meeting on Wednesday to discuss the future of cash distribution, amid warnings from cash transport firm Armaguard that the growing shift to digital payments may threaten the company’s viability. Reserve Bank of Australia governor Michele Bullock says there are merits to exploring a co-operative model for cash distribution, which would require authorisation from the Australian Competition & Consumer Commission. Bullock added that the central bank places a high priority on the community continuing to have reasonable access to cash withdrawal and deposit services.

CORPORATES
RESERVE BANK OF AUSTRALIA, ARMAGUARD

Stock rally brings super fund returns back into the black

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Original article by Megan Neil
The Australian – Page: 15 : 12-Dec-23

Data from SuperRatings suggests that the median balanced superannuation fund gained 3.1 per cent in November. This follows negative returns in each of the previous three months, and the research house expects the median fund to achieve a return of about one per cent for the first five months of 2023-24. SuperRatings also estimates that the median fund will post a gain of about 6.8 per cent for the first 11 months of calendar 2023.

CORPORATES
SUPERRATINGS PTY LTD

Insurers’ flood cover options in flux

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Original article by Liam Walsh
The Australian Financial Review – Page: 15 : 12-Dec-23

Allianz has told a federal parliamentary inquiry into the 2022 floods that devasted large parts of eastern Australia that it is reviewing its customer choice flood cover. Currently one of the few home insurers that gives customers the option of having flood coverage, Allianz indicated it is now considering making it mandatory. For its part, Suncorp has told the inquiry that it has abolished two types of caravan and RV insurance, with these relating to relocatable homes and onsite caravans. It stated they were "unsustainable", due to the risks of associated with being located in caravan parks prone to flooding.

CORPORATES
ALLIANZ AUSTRALIA LIMITED, SUNCORP GROUP LIMITED – ASX SUN