K: Financial and Insurance Services

‘Solvency phase’: RBA warns of new bank pain

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Original article by Richard Gluyas
The Australian – Page: 13 & 17 : 16-Dec-20

The Reserve Bank of Australia’s head of stability Jonathan Kearns says the liquidity phase of the COVID-19 crisis is giving way to a solvency phase, which is emerging as a new challenge for the banking sector. Kearns says the economic shock from the pandemic has been much worse than the global financial crisis, but notes that Australia’s banks have been resilient during COVID-19 and have continued to lend. Banks are likely to start encouraging customers to resume loan repayments in the March quarter, after many opted to defer repayments due to the pandemic.

CORPORATES
RESERVE BANK OF AUSTRALIA

Banks face trust crisis as customers go online

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Original article by Cliona O’Dowd
The Australian – Page: 15 : 14-Dec-20

Accenture has released a report which shows that the proportion of Australians who trust banks to look after their financial wellbeing has fallen from 43 per cent to 29 per cent since 2018. Alex Trott of Accenture says the rapid shift to digital banking in response to the COVID-19 pandemic may undermine the progress that banks have made in restoring consumers’ trust in the wake of the Hayne royal commission. The report notes that fewer consumers have changed lenders in 2020, despite growing distrust of the banking sector.

CORPORATES
ACCENTURE

AusSuper goes solo in $5bn Infratil bid

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Original article by Cliona O’Dowd
The Australian – Page: 13 & 19 : 9-Dec-20

AustralianSuper is offering $NZ7.43 ($7.04) per share in an indicative, non-binding takeover offer for New Zealand-based Infratil. The offer comprises a cash component of $NZ5.79 per share and an in-specie distribution of shares in renewable energy provider Trustpower. The bid for the dual-listed Infratil is the first major deal that AustralianSuper has pursued on its own; the industry fund has previously teamed up with co-investors to bid for companies such as Navitas and Healthscope. AustralianSuper is said to have been looking at Infratil for at least a year.

CORPORATES
AUSTRALIANSUPER PTY LTD, INFRATIL LIMITED – ASX IFT, NAVITAS LIMITED, HEALTHSCOPE LIMITED

Super fund satisfaction increases in October

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Original article by Roy Morgan
Market Research Update – Page: Online : 9-Dec-20

New data from Roy Morgan’s Superannuation Satisfaction Report shows an overall super fund satisfaction rating of 61.0% in October. This is an increase of 0.6% points from a month ago, but still down 3.1% points on a year ago. The most recent ratings cover the period since May 2020, during which time Australians in financial hardship were able to apply to withdraw two tranches of up to $10,000 of their superannuation. Importantly, the monthly increase in Superannuation Satisfaction is the first month-on-month increase since the COVID-19 pandemic and appears to represent a turning of the corner for the rating after declining during the worst months of the pandemic. The largest increase by sector was for Self-Managed Funds, which increased 1.5% points to a customer satisfaction rating of 65.3%. Public Sector Funds increased their customer satisfaction by 1.3% points to 71.5% and for the fifth month in a row have clearly the highest rating. The customer satisfaction rating of Industry Funds rose by 0.4% points to 62.5% in October, and Retail Funds were up 0.1% to 53.6%. The report’s findings are from Roy Morgan Single Source, Australia’s most trusted consumer survey, compiled by in-depth interviews with over 50,000 Australians each year.

CORPORATES
ROY MORGAN LIMITED

CBA faces penalty over rates slug

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Original article by Joyce Moullakis, David Ross
The Australian Financial Review – Page: 16 : 2-Dec-20

The Australian Securities & Investments Commission has launched legal action against the Commonwealth Bank of Australia over allegations that it breached financial services laws. ASIC contends that customers with business overdraft accounts were charged incorrect interest rates between December 2014 and March 2018. CBA has advised that 2,269 customers who were overcharged during this period have been reimbursed $3.74m in total. ASIC is seeking pecuniary penalties and other orders.

CORPORATES
COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA

Dividend payouts fall 50pc in quarter

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Original article by Cliona O’Dowd
The Australian – Page: 15 : 23-Nov-20

Data from Janus Henderson shows that Australian-listed companies paid out $US9.6bn ($13.4bn) worth of dividends in the September quarter, which is 47.8 per cent lower than the same period in 2019. This was primarily due to reduced dividends from three of the major banks, while a number of companies chose to withhold dividends. Jane Shoemake of Janus Henderson says payout ratios in Australia were too high and a "reset" was needed. Janus Henderson expects dividend payouts to rise in the second quarter of 2021.

CORPORATES
JANUS HENDERSON GROUP PLC – ASX JHG

Consumer groups savage responsible lending plan

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Original article by Paul Smith
The Australian Financial Review – Page: 19 : 23-Nov-20

The federal government’s proposed changes to responsible lending laws have been attacked by a consortium of consumer rights advocacy groups. In a submission to the government’s inquiry into the proposed changes, the groups have labelled them as "fundamentally defective". They note that the changes represent a direct contradiction of the banking royal commission’s first recommendation, namely that the National Consumer Credit Protection Act should not be revised to alter the "obligation to assess unsuitability".

CORPORATES
CONSUMER CREDIT LEGAL SERVICE, CONSUMER ACTION LAW CENTRE, AUSTRALIA. ROYAL COMMISSION INTO MISCONDUCT IN THE BANKING, SUPERANNUATION AND FINANCIAL SERVICES INDUSTRY

Regulator urged not to curtail BNPL

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Original article by Richard Gluyas
The Australian – Page: 21 : 20-Nov-20

Liberal senator Andrew Bragg will use a StartUp Aus speech on 20 November to caution against over-regulating the ‘buy now, pay later’ sector. In the wake of the Australian Securities & Investments Commission’s recent report on the sector, Bragg will emphasise the need for ASIC to enforce the law rather than "pontificate on policy". Bragg will also use the speech to argue that the new national security in Hong Kong presents an opportunity for Australia to become a regional financial centre.

CORPORATES
LIBERAL PARTY OF AUSTRALIA, AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION

CBA profits cut despite growth in lending

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Original article by James Frost, James Eyers
The Australian Financial Review – Page: 17 : 12-Nov-20

The Commonwealth Bank of Australia has reported a cash profit of $1.8bn for the September quarter, which is 16 per cent lower than previously. Household deposits increased by $15.8bn during the first three months of 2020-21, while mortgage lending increased by $5.6bn. CBA has advised that its net interest margin was lower than in the second half of 2019-20, primarily due to the impact of lower interest rates. CBA has also reported a sharp fall in the number of deferred loans since the end of the September quarter.

CORPORATES
COMMONWEALTH BANK OF AUSTRALIA – ASX CBA

A November to remember amid US poll results, vaccine hope

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Original article by David Rogers
The Australian – Page: 13 & 20 : 12-Nov-20

Australia’s benchmark S&P/ASX 200 has gained 8.8 per cent so far in November, and it is now just 11.5 per cent shy of the record peak of 7,197.2 points in February. The market has been boosted by factors such as the outcome of the US presidential election and the encouraging initial clinical trial results for Pfizer’s coronavirus vaccine candidate. JP Morgan anticipates further upside for equities, forecasting that the global bull run is not yet over.

CORPORATES
STANDARD AND POOR’S ASX 200 INDEX, JP MORGAN AND COMPANY INCORPORATED