K: Financial and Insurance Services

Deluge of flood claims has investors fleeing

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Original article by David Ross
The Australian – Page: 15 : 1-Mar-22

The Insurance Council of Australia has advised that more than 15,000 insurance claims arising from floods in Queensland and New South Wales have been lodged to date. Suncorp had received 5,000 claims by Monday morning, while Insurance Australia Group had received more than 3,200 claims by Sunday evening. Suncorp has also indicated that it may incur losses of up to $75m as a result of the floods; the general insurer recently reported that its costs associated with weather events in the first half of 2021-22 totalled $695m.

CORPORATES
INSURANCE COUNCIL OF AUSTRALIA LIMITED, SUNCORP GROUP LIMITED – ASX SUN, INSURANCE AUSTRALIA GROUP LIMITED – ASX IAG

CBA unveils $2bn share buyback

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Original article by Joyce Moullakis
The Australian – Page: 13 & 24 : 10-Feb-22

The Commonwealth Bank of Australia has posted a 2021-22 interim cash profit of $4.75bn, which is 23 per cent higher than previously. The result was boosted by strong growth in mortgage and business loans and a decline in bad debts. However, the bank’s net interest margin fell by 17 basis points to 1.92 per cent. Shareholders will receive a fully franked interim dividend of $1.75 per share, while CBA will repurchase $2bn worth of its shares. CEO Matt Comyn has flagged the possibility of returning more capital to shareholders.

CORPORATES
COMMONWEALTH BANK OF AUSTRALIA – ASX CBA

Future Fund tops $200b, banks on active managers

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Original article by Jonathan Shapiro
The Australian Financial Review – Page: 15 & 20 : 2-Feb-22

The federal government’s Future Fund has posted a return of 19.1 per cent for 2021. The sovereign wealth fund’s assets under management rose to a new high of $204bn during the calendar year. It has achieved a return of about 10.8 per cent each year since it was established in 2006 with just $60.5bn worth of assets. Future Fund CEO Raphael Arndt has warned that investors cannot expect the "easy returns" of the last decade or so to continue. He adds that some asset classes will be impacted when interest rates start to rise, although he has downplayed the prospect of stagflation.

CORPORATES
AUSTRALIA. FUTURE FUND MANAGEMENT AGENCY

Profits headed for record

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Original article by Alex Gluyas
The Australian Financial Review – Page: 1 & 27 : 1-Feb-22

Analysts are upbeat about the earnings outlook for listed companies in the February reporting season, despite headwinds such as the coronavirus-induced supply chain disruptions. The consensus of analysts is that S&P/ASX 200 companies’ growth in earnings per share will exceed pre-pandemic levels. However, Karen Jorritsma of RBC Capital Markets says it will be a "very messy" reporting season, due to factors such as rising costs. Ansell has become the latest company to downgrade its earnings per share guidance in response to cost pressures.

CORPORATES
STANDARD AND POOR’S ASX 200 INDEXRBC CAPITAL MARKETSANSELL LIMITED – ASX ANN

Economists give Lowe a pass for 2021, except for one thing

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Original article by Ronald Mizen
The Australian Financial Review – Page: 3 : 7-Jan-22

A survey of 23 economists regarding their views on the performance of the Reserve Bank in 2021 has seen RBA governor Philip Lowe score 72.5 per cent for his leadership. The RBA scored 76 per cent on management of monetary policy, while its communication of policy and intentions scored 66 per cent. The only area in which the economists felt that the RBA failed was in regards to its termination of its policy to suppress the yield on three-year Treasury bonds, which received only 41 per cent support.

CORPORATES
RESERVE BANK OF AUSTRALIA

New Covid variant could hit RBA’s plans to taper

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Original article by Ronald Mizen
The Australian Financial Review – Page: 8 : 22-Dec-21

The minutes of the Reserve Bank of Australia’s monthly board meeting for December show that the central bank remains upbeat about the outlook for the economy. The RBA does not expect the new Omicron variant of COVID-19 to "derail" the nation’s economic recovery. However, the variant may affect the RBA’s timetable for winding back quantitative easing.

CORPORATES
RESERVE BANK OF AUSTRALIA

Hostile bids abound in era of uncertainty

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Original article by Richard Gluyas
The Australian – Page: 15 : 23-Nov-21

Data from law firm Minter Ellison shows that there have been eight hostile takeover bids in Australia so far in 2021, following nine such bids in 2020. This compares with just five in 2019, prior to the COVID-19 pandemic. Minter Ellison notes that the target’s board did not commission an independent expert’s report in 15 of the last 20 hostile takeover bids. Alberto Colla of Minter Ellison says bidders usually prefer to pursue a friendly takeover bid that has the support and recommendation of the target’s board.

CORPORATES
MINTER ELLISON

ASX carrying $200b of zero-profit market cap

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Original article by Vesna Poljak
The Australian Financial Review – Page: 29 : 23-Nov-21

Research by MST Marquee shows that 48 companies in the S&P/ASX 300 currently do not make a profit. This compares with an average of 37 over the last two decades. The 48 unprofitable companies have a combined market capitalisation of about $200bn. Hasan Tevfik of MST suggests that central banks are a major cause of the rise in profitless companies, with ultra-low interest rates prompting an increase in speculative investment.

CORPORATES
MST MARQUEE, STANDARD AND POOR’S ASX 300 INDEX

ASIC warning: no crypto safety net

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Original article by John Kehoe, Michael Read
The Australian Financial Review – Page: S3 : 23-Nov-21

Australian Securities & Investments Commission chairman Joe Longo has urged retail investors to be cautious when it comes to putting money into cryptocurrencies, as he doubts that many understand what they are investing in. He admitted to the 2021 Super & Wealth summit that ASIC has very little power to intervene in cryptocurrency assets as many are probably not financial products. Fidelity portfolio manager Kate Howitt told the summit that assessing the value of crypto is difficult because it is an asset that does not have a cash flow stream.

CORPORATES
AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION, FIDELITY INVESTMENTS AUSTRALIA LIMITED

Australia’s cash hoard grows 20pc to almost $100 billion

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Original article by James Eyers
The Australian Financial Review – Page: 17 & 20 : 17-Nov-21

Data from the Reserve Bank of Australia shows that $50 and $100 banknotes now comprise 73 per cent of banknotes in circulation, and 94 per cent by value. The RBA adds that demand for lower-value banknotes has been ‘subdued’ during the COVID-19 pandemic. The total value of Australian banknotes in circulation has risen to nearly $100bn since the start of the pandemic, and the RBA estimates that Australians are storing between $50bn and $75bn of this amount in cash rather than in financial institutions. The RBA concedes that low interest rates may be a key driver of this "hoarding". The trend may also reflect the strength of the black economy.

CORPORATES
RESERVE BANK OF AUSTRALIA