K: Financial and Insurance Services

Prepare for drawn-out downturn

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Original article by Richard Gluyas
The Australian – Page: 13 & 17 : 1-May-20

The ANZ Bank has posted an interim cash profit of $1.41bn, which is 60 per cent lower than previously. The result was marred by impairment charges totalling $1.7bn, while a decision on its half-year dividend will be deferred until August due to uncertainty regarding the economic impact of the coronavirus pandemic. ANZ’s common equity tier one ratio has fallen to 10.8 per cent, compared with 11.5 per cent a year ago. Meanwhile, CEO Shayne Elliott says the Australian economy is unlikely to experience a V-shaped recovery.

CORPORATES
AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ

Westpac braces for virus shock

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Original article by Joyce Moullakis
The Australian – Page: 17 & 21 : 29-Apr-20

Westpac has advised that its half-year accounts will include a pre-tax impairment charge of $2.24bn. This includes a $1.6bn provision for coronavirus-related loan losses. However, CEO Peter King says the bank is well-positioned to absorb an increase in loan losses, while Westpac does not expect the impairment charges to have much effect on its common equity tier-one capital ratio. Westpac is not expected to undertake a capital raising, having raised some $2.77bn from investors in November. Westpac will release its interim results on 4 May.

CORPORATES
WESTPAC BANKING CORPORATION – ASX WBC

Virus-plagued NAB seeks $3.5bn

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Original article by Richard Gluyas
The Australian – Page: 13 & 17 : 28-Apr-20

National Australia Bank has posted a 2019-20 interim net profit of $1.3bn, compared with $2.7bn previously. Loan impairments rose to $1.2bn due to a sharp increase in provisions due to the coronavirus, while NAB has reduced its interim dividend from $0.83 per share to just $0.30. NAB shares were suspended from trading on 27 April pending a $3.5bn capital raising, which comprises a $3bn institutional placement and a $500m share purchase plan. Meanwhile, NAB is bearish about the outlook for the economy and unemployment in the near-term.

CORPORATES
NATIONAL AUSTRALIA BANK LIMITED – ASX NAB

Greedy banks protect profits: ACCC

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Original article by Cliona O’Dowd, David Ross
The Australian – Page: 15 : 28-Apr-20

The Australian Competition & Consumer Commission has released the interim report of its Home Loan Price Inquiry. It has concluded that the nation’s four major banks failed to pass on the full 75 basis point reduction in the cash rate during 2019 in order to protect their profits. The ACCC also found that existing home loan customers tend to pay higher interest rates than new borrowers. Steve Mickenbecker of Canstar says it is a ‘lethargy tax’ rather than a ‘loyalty tax’, and the onus should be on existing customers to actively request a lower interest rate.

CORPORATES
AUSTRALIAN COMPETITION AND CONSUMER COMMISSION, CANSTAR PTY LTD

Crisis spurs a rush to raise capital

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Original article by Ben Wilmot, Glenda Korporaal, Perry Williams
The Australian – Page: 13 & 17 : 28-Apr-20

National Australia Bank, Charter Hall Retail REIT and Monash IVF are among the latest companies to undertake capital raisings. Australian-listed companies have now raised more than $15bn from investors during the coronavirus pandemic, and Simon Ranson of JP Morgan expects this trend to continue. However, some companies have attracted criticism for giving preference to certain investors in the allocation of new shares.

CORPORATES
NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, CHARTER HALL RETAIL REIT – ASX CQR, MONASH IVF GROUP LIMITED – ASX MVF, JP MORGAN AUSTRALIA LIMITED

Billions of early super released

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Original article by Cliona O’Dowd
The Australian – Page: 13 & 17 : 24-Apr-20

The Australian Taxation Office has already approved 456,000 applications from superannuation fund members who want to utilise the federal government’s early access scheme. Some $3.8m worth of withdrawals have been approved since the scheme opened on 20 April; more than 900,000 people had previously registered interest in the scheme, which is restricted to fund members who have experienced financial hardship due to the pandemic. Association of Super Funds of Australia CEO Martin Fahy has downplayed concerns that some super funds may face liquidity issues due to the early access scheme.

CORPORATES
AUSTRALIAN TAXATION OFFICE, AUSTRALIA. DEPT OF THE TREASURY, THE ASSOCIATION OF SUPERANNUATION FUNDS OF AUSTRALIA LIMITED

CBA delays all SME repayments

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Original article by Max Maddison
The Australian – Page: 17 : 24-Apr-20

The Council of Small Business Organisations’ deputy chairman David Gandolfo has welcomed the Commonwealth Bank’s decision to defer loan repayments for many small business customers until the end of June. The loan deferral will automatically apply to small business accounts that have lending limits of less than $5m, although these customers can opt to continue making repayments. Business customers with loans of between $5m and $10m will be able to defer repayments for six months due to the impact of the pandemic.

CORPORATES
COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, COUNCIL OF SMALL BUSINESS ORGANISATIONS OF AUSTRALIA LIMITED

Hopes of V-shaped recovery likely to be dashed

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Original article by David Rogers
The Australian – Page: 20 : 24-Apr-20

The global sharemarket has recovered about 50 per cent of the losses incurred in the sell-off during February and March. However, a further V-shaped recovery for equities is likely to be dependent on the global economy being restarted quickly. A V-shaped economic recovery is also unlikely, according to economists. Josh Williamson of Citigroup expects Australia’s economic growth to fall by 5.8 per cent in 2019-20, before rebounding by 6.1 per cent in 2020-21. However, he does not expect the economy to return to pre-virus growth levels until late 2021.

CORPORATES
CITIGROUP PTY LTD

ASX equities to be hit by forced selling as workers grab super

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Original article by Melissa Yeo
The Australian – Page: 20 : 23-Apr-20

Matthew Ross of Goldman Sachs estimates that up to $44bn could be withdrawn from superannuation funds by people who have been financially hit by the pandemic, compared with the federal government’s forecast of $27bn. The early access scheme may result in liquidity issues for some super funds, which could in turn be forced to reduce their exposure to shares. Ross says this could potentially reduce the benchmark S&P/ASX 200’s market ­capitalisation by around 0.45 per cent.

CORPORATES
GOLDMAN SACHS AUSTRALIA PTY LTD, STANDARD AND POOR’S ASX 200 INDEX

$A doing its job to help stabilise the economy

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Original article by Sarah Turner, Jonathan Shapiro
The Australian Financial Review – Page: 31 : 22-Apr-20

The Reserve Bank of Australia has bought $47bn worth of federal and state government bonds since 20 March. The central bank has progressively reduced its daily bond purchases from $5bn to just $500m since then, and it will now buy federal government bonds three times a week and state bonds just once a week. Meanwhile, RBA governor Philip Lowe says the Australian dollar fell more sharply than he had expected in March. It reached a low of $US0.5741 and has since recovered to around $US0.63. Lowe says the currency has been a "great shock-absorber" for the domestic economy over the last three decades.

CORPORATES
RESERVE BANK OF AUSTRALIA