K: Financial and Insurance Services

Banks must go harder on costs: KPMG

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Original article by James Frost
The Australian Financial Review – Page: 16 : 9-Jul-20

KPMG partner Hessel Verbeek warns that Australia’s banks face the prospect of single-digit returns on equity in the wake of the coronavirus pandemic. He argues that they will have to be much more aggressive in reducing costs. Verbeek has identified branch closures and product rationalisation as some of the areas that offer scope for cost savings. He notes that overseas banks have been much more active in pursuing such strategies; Australian banks have closed just 14 per cent of their branches since 2015, while British banks have closed 33 per cent.

CORPORATES
KPMG AUSTRALIA PTY LTD

Investors brace for harder hit from second wave

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Original article by David Rogers
The Australian – Page: 20 : 9-Jul-20

The S&P/ASX 200 has shed 3.2 per in the last three trading sessions, while the Australian dollar has retreated ahead of Melbourne going into lockdown. Damien Boey of Credit Suisse says policymakers may have underestimated the economic cost of the lockdown, which may be closer to $26bn than the $6bn that has been forecast. He adds that the new lockdown may the "straw that broke the camel’s back" for many small businesses that were already struggling. Analysts also expect the new coronavirus outbreak in Victoria to weigh on corporate earnings and dividend payouts.

CORPORATES
STANDARD AND POOR’S ASX 200 INDEX, CREDIT SUISSE (AUSTRALIA) LIMITED

Big banks accused of climate hypocrisy

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Original article by James Fernyhough
The Australian Financial Review – Page: 20 : 8-Jul-20

Market Forces estimates that Australia’s four major banks have provided a combined $35.5bn worth of loans for fossil fuel projects since 2016. The activist group, which is affiliated with Friends of the Earth, contends that this is inconsistent with their commitment to the Paris climate agreement. National Australia Bank’s chief risk officer Shaun Dooley recently stated that the bank aims to assist business customers to transition away from fossil fuels, due to the economic impact of a complete and rapid withdrawal from the sector.

CORPORATES
MARKET FORCES, FRIENDS OF THE EARTH, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB

Retail super funds face member flight

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Original article by Cliona O’Dowd
The Australian – Page: 15 : 8-Jul-20

Research by KPMG suggests that nearly 25 per cent of retail superannuation fund members are likely to switch funds during the next year, compared with less than 10 per cent of industry super fund members. KPMG partner Tim Thomas says lower fees of industry funds is a major contributor to the expected exodus of retail fund members. However, he cautions that industry funds risk a similar loss of members if they do not take action to improve the quality of their services. KPMG has also found that nearly 80 per cent of consumers now prefer to interact with financial services providers via digital channels.

CORPORATES
KPMG AUSTRALIA PTY LTD

Banks to extend loan deferrals

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Original article by Joyce Moullakis
The Australian – Page: 13 & 19 : 8-Jul-20

Australian banks have agreed to extend the deferral of household and business loan repayments by up to four months. The move follows concern about a looming ‘financial cliff’ when the current six-month deferral period ends in September. However, the Australian Banking Association has stressed that customers who have the capacity to resume loan repayments when the initial deferral period ends should do so. It is estimated that nearly 800,000 bank customers have deferred their loan repayments due to the coronavirus pandemic.

CORPORATES
AUSTRALIAN BANKING ASSOCIATION

Funds face more outflows: APRA

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Original article by Samantha Bailey
The Australian – Page: 15 : 7-Jul-20

Data from the Australian Prudential Regulation Authority shows that superannuation fund members have now withdrawn some $18.1bn via the federal government’s early access scheme. APRA expects the new financial year to prompt another surge in applications to withdraw money from super funds. People who have experienced financial hardship due to the coronavirus pandemic can withdraw up to $10,000 from their super fund in both the 2019-20 and 2020-21 financial years.

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AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY

Slim returns among super’s top performers

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Original article by Joanna Mather
The Australian Financial Review – Page: 6 : 7-Jul-20

Chant West has forecast that the median superannuation fund will post a return of minus 1.3 per cent for 2019-20. The firm also expects the returns for growths to range from minus six per cent to three per cent. Meanwhile, First State Super is among the super funds that have defied the trend, posting a return of 1.3 per cent for the financial year. Cbus achieved a return of 0.75 per cent, and chief investment officer Kristian Fok says a number of factors contributed to the positive return.

CORPORATES
CHANT WEST FINANCIAL SERVICES PTY LTD, FIRST STATE SUPER, CONSTRUCTION AND BUILDING UNIONS’ SUPERANNUATION FUND

Capital raising rush far from over

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Original article by Joyce Moullakis
The Australian – Page: 13 & 19 : 1-Jul-20

Data from Refinitiv shows that Australian-listed companies raised $US14.9bn ($21.8bn) via the issuance of new shares in the June quarter, as they sought to boost their balance sheets in response to the coronavirus pandemic. This is the highest quarterly total since late 2010, while some $US18.8bn worth of new shares were issued in the first half of calendar 2020. Fund managers generally expect the capital raisings momentum to be maintained in the second half. Meanwhile, the total value of mergers and acquisitions fell to $US24.9bn in the first half of 2020, compared with $US48.2bn for the first half of 2019.

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REFINITIV AUSTRALIA PTY LTD

Greed, fear: ASX wraps worst year since 2012

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Original article by William McInnes
The Australian Financial Review – Page: 12 & 24 : 1-Jul-20

The Australian sharemarket shed 10.9 per cent during 2019-20, in a turbulent financial year for investors. The local bourse reached a record high in February, before the coronavirus pandemic prompted a savage sell-off. However, a number of stocks performed well during 2019-20, with Afterpay, Fisher & Paykel Healthcare and Mesoblast all gaining more than 100 per cent. Fund managers warn that the August reporting season will be a key test for the sharemarket’s recent rebound.

CORPORATES
STANDARD AND POOR’S ASX 200 INDEX, AFTERPAY LIMITED – ASX APT, FISHER AND PAYKEL HEALTHCARE CORPORATION LIMITED – ASX FPH, MESOBLAST LIMITED – ASX MSB

Cash warns banks to reduce tap and go fees

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Original article by James Eyers
The Australian Financial Review – Page: 12 : 26-Jun-20

The Minister for Small and Family Business, Michaelia Cash, says retailers have complained that banks are not offering to send ‘tap and go’ payments down the cheapest payment network. Previous research has indicated that retailers could be paying up to $550 million in extra transaction fees a year because banks are sending payments through the more expensive networks operated by Visa and Mastercard than via the cheaper Eftpos network. Cash has called on the banks to offer ‘least cost routing’ to retailers, whereby transactions are automatically processed through the network that charges the lowest fee.

CORPORATES
AUSTRALIA. DEPT OF EMPLOYMENT, SKILLS, SMALL AND FAMILY BUSINESS