K: Financial and Insurance Services

Banks stare at low growth as pressures rise

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Original article by James Eyers
The Australian Financial Review – Page: 15 & 19 : 9-Nov-16

The combined cash earnings of Australia’s four major banks fell by 2.5 per cent in 2015-6, to $A29.6bn. They recorded net interest income growth of 5.5 per cent, to $A60.3bn, but non-interest income was down 3.1 per cent at $A23.5bn. Michael Rowland of KPMG says the banks are facing a number of headwinds, including the prospect of lower growth in revenue and return on equity, growing competition and an increase in regulatory costs.

CORPORATES
KPMG AUSTRALIA PTY LTD, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, WESTPAC BANKING CORPORATION – ASX WBC, PM CAPITAL LIMITED, ERNST AND YOUNG

Buckle up for a day of unusual volatility

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Original article by David Rogers, Andrew White, Paul Garvey
The Australian – Page: 19 & 28 : 9-Nov-16

The US presidential election is set to dominate financial market trading on 9 November 2016. Voting trends will have emerged by the time the Australian sharemarket opens, while market volatility can be expected as exit polls are released over the course of the local trading day. The Chicago Board Options Exchange’s Volatility Index has returned to its long-term average of 19, which suggests that financial markets do not anticipate that Donald Trump will win.

CORPORATES
STANDARD AND POOR’S ASX 200 INDEX, CHICAGO BOARD OPTIONS EXCHANGE VOLATILITY INDEX, STANDARD AND POOR’S 500 INDEX, UNITED STATES. FEDERAL RESERVE BOARD, VOTECASTR, REPUBLICAN PARTY (UNITED STATES), DEMOCRATIC PARTY (UNITED STATES), RESERVE BANK OF AUSTRALIA, MONASH UNIVERSITY, ECONOMICS SOCIETY OF AUSTRALIA, UNITED STATES. FEDERAL BUREAU OF INVESTIGATION, AUSDRILL LIMITED – ASX ASL

Westpac returns hit by need to build capital

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Original article by James Eyers
The Australian Financial Review – Page: 11 & 15 : 8-Nov-16

Westpac has posted a 2015-16 cash profit of $A7.8bn. Its return on equity fell by 1.85 per cent to 14 per cent in the year to 30 September 2016, and its ROE target has been scaled back from 15 per cent to 13-14 per cent due to factors such as new capital requirements for the banking sector. PwC estimates that the combined ROE of the four major banks fell by 127 basis points to 13.75 per cent in 2015-16. Meanwhile, Westpac will seek to reduce its cost-to-income ratio from 42 per cent at present to less than 40 per cent

CORPORATES
WESTPAC BANKING CORPORATION – ASX WBC, PRICEWATERHOUSECOOPERS AUSTRALIA (INTERNATIONAL) PTY LTD, CITIGROUP PTY LTD, AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY, BANK FOR INTERNATIONAL SETTLEMENTS. BASEL COMMITTEE ON BANKING SUPERVISION, KPMG AUSTRALIA PTY LTD, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ

Clinton victory set to unleash a ‘wave of cash’ into global markets

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Original article by David Rogers, Glenda Korporaal, Michael Bennet
The Australian – Page: 19 & 32 : 8-Nov-16

The Australian sharemarket rallied on 7 November 2016, after a new FBI probe cleared US presidential candidate Hillary Clinton over the use of a private email server. AMP Capital’s Nader Naeimi says investors are likely to reallocate cash holdings to higher-risk assets if Clinton wins the election. Meanwhile, Paul Donovan of UBS has warned that world trade and global capital flows could be disrupted if Donald Trump becomes president.

CORPORATES
STANDARD AND POOR’S ASX 200 INDEX, AMP CAPITAL INVESTORS LIMITED, UBS AG, WESTPAC BANKING CORPORATION – ASX WBC, NIKKEI 225 INDEX, NZSX-50 INDEX, UNITED STATES. FEDERAL BUREAU OF INVESTIGATION, UNITED STATES. FEDERAL RESERVE BOARD

Credit won’t predict next crisis, but gives protection

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Original article by Jonathan Shapiro
The Australian Financial Review – Page: 13 & 17 : 7-Nov-16

Alexander Funds Management MD Chris Black notes that credit markets anticipated the global financial crisis well before equity markets. He says the GFC was primarily a credit-driven event, but this will not be the case with the next financial market crash. He adds that credit will be a safer asset class when the next financial market downturn comes. Alexander Funds has delivered a return of 16.64 per cent since it was founded as Laminar in 2009, but Black cautions that investors should not expect returns similar to those in the years immediately after the GFC.

CORPORATES
ALEXANDER FUNDS MANAGEMENT PTY LTD, CROWN RESORTS LIMITED – ASX CWN

Ingham shares hatch to wary IPO market

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Original article by Vesna Poljak
The Australian Financial Review – Page: 13 & 18 : 7-Nov-16

Inghams Group’s listing on the Australian sharemarket on 7 November is likely to be closely scrutinised by investors after the IPO had to be repriced. The stock has been issued at $A3.15 per share, compared with initial hopes of between $A3.57 to $A4.14. Bravura Solutions and the Charter Hall Long WALE REIT have also been forced to scale back the issue price of their stock. Some fund managers note that investor sentiment has changed in recent weeks, particularly with regard to IPOs.

CORPORATES
INGHAMS GROUP LIMITED – ASX ING, BRAVURA SOLUTIONS LIMITED – ASX BVS, CHARTER HALL LONG WALE REIT – ASX CLW, APOLLO TOURISM AND LEISURE LIMITED – ASX ATL, PENGANA EMERGING COMPANIES FUND, TPG CAPITAL LP, THE CARLYLE GROUP, PACIFIC EQUITY PARTNERS PTY LTD, HEALTHSCOPE LIMITED – ASX HSO, DICK SMITH HOLDINGS LIMITED, ANCHORAGE CAPITAL PARTNERS PTY LTD, INVESTORS MUTUAL LIMITED, AUTOSPORTS GROUP LIMITED – ASX ASG

ASX slips for a third day, US worry lingers

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Original article by Jessica Sier
The Australian Financial Review – Page: 26 : 4-Nov-16

The S&P/ASX 200 index closed 0.1 per cent lower at 5,225.6 points on 3 November 2016. The All Ordinaries index declined 0.1 per cent to 5,306.5. Investors are concerned about the chaotic US presidential election. Shares in Warrnambool Cheese & Butter Factory rose 5.2 per cent to $A6.85 following the announcement of a profit of $A20.8 million in the six months to 30 September and a 10 per cent rise in revenue to $A325.9 million.

CORPORATES
STANDARD AND POOR’S ASX 200 INDEX, WARRNAMBOOL CHEESE AND BUTTER FACTORY COMPANY HOLDINGS LIMITED – ASX WCB, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, UNITED STATES. FEDERAL RESERVE BOARD, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, BORAL LIMITED – ASX BLD, SOUTH32 LIMITED – ASX S32, BHP BILLITON LIMITED – ASX BHP, RIO TINTO LIMITED – ASX RIO

ANZ shrinks to reduce rising risks

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Original article by James Eyers
The Australian Financial Review – Page: 1 : 4-Nov-16

The ANZ Bank has announced a fall of 18 per cent in cash profit to $A5.9 billion for 2015-16. Return on equity fell to 12.2 per cent, from 13.8 per cent a year ago. The cost to income ratio for the year declined to 44.8 per cent. ANZ CEO Shayne Elliott said the bank reduced its workforce by 3,600 jobs over the year to 30 September 2016. The stock rose 0.6 per cent to $A27.35 on 3 November 2016.

CORPORATES
AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ

RBA likely to cut again but not in a hurry

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Original article by Jessica Sier
The Australian Financial Review – Page: 35 : 3-Nov-16

Financial markets now consider that there is an eight per cent chance that the Reserve Bank of Australia will reduce official interest rates in December 2016. However, there is now seen to be a 36 per cent change that rates will be cut by May 2017. Michael Blythe of the Commonwealth Bank anticipates another rate cut during the June quarter, while Paul Dales of Capital Economics says there is potential for the next change in monetary policy to be an increase in the cash rate.

CORPORATES
RESERVE BANK OF AUSTRALIA, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, CAPITAL ECONOMICS LIMITED

Trump’s surge spooks markets

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Original article by Cameron Stewart, David Rogers
The Australian – Page: 1 & 10 : 3-Nov-16

Sharemarkets in Australia and Asia were sold down on 2 November 2016, after an ABC News/Washington Post poll showed that US presidential candidate Donald Trump now has a one percentage point lead over Hillary Clinton. The RealClear Politics average of polls also shows that Trump has significantly narrowed Clinton’s lead in the last week. Westpac economists have warned that a Trump victory could have a bigger impact on global financial markets than the UK’s Brexit referendum.

CORPORATES
STANDARD AND POOR’S ASX 200 INDEX, NIKKEI 225 INDEX, HANG SENG INDEX, SHANGHAI COMPOSITE INDEX, KOSPI INDEX, WESTPAC BANKING CORPORATION – ASX WBC, WILSON ASSET MANAGEMENT, REPUBLICAN PARTY (UNITED STATES), DEMOCRATIC PARTY (UNITED STATES)