K: Financial and Insurance Services

Westpac flags $1.4b first-half hit, expects more to come

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Original article by James Frost
The Australian Financial Review – Page: 15 & 18 : 15-Apr-20

Westpac has advised that its financial accounts for the first half of fiscal 2020 will include provisions of $1,030m associated with Austrac’s money-laundering probe. Westpac will also increase its provisions for customer remediation and legal costs by $260m. The financial hit will reduce Westpac’s common equity tier 1 capital ratio by about 30 basis points, to 10.5 per cent. Dermot Ryan of AMP Capital expects Australian banks that report their half-year results in May to slash their dividend payouts.

CORPORATES
WESTPAC BANKING CORPORATION – ASX WBC, AMP CAPITAL INVESTORS LIMITED

Reserve Bank now important bond player

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Original article by Sarah Turner
The Australian Financial Review – Page: 31 : 15-Apr-20

Su-Lin Ong of RBC Capital Markets says the federal government has issued some $48bn worth of bonds so far in 2019-20. She estimates that the Reserve Bank of Australia has bought about $36bn worth of these government bonds in the last three weeks, as part of its quantitative easing program. Westpac’s Damien McColough notes that the central bank has emerged as one of the largest bond fund managers in the local market. Meanwhile, Ong says government bond issuance for 2019-20 could potentially top $160bn.

CORPORATES
RBC CAPITAL MARKETS, RESERVE BANK OF AUSTRALIA, WESTPAC BANKING CORPORATION – ASX WBC

Bank shareholders face $7bn hit

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Original article by Michael Roddan
The Australian – Page: 13 & 16 : 9-Apr-20

Shares in Australia’s major banks retreated on 8 April, after the Australian Prudential Regulation Authority asked them to consider delaying or reducing their dividend payments due to the coronavirus crisis. The Bank of Queensland has already advised that it will defer its interim dividend, while investors in Westpac, National Australia Bank and the ANZ Bank were slated to receive a combined $7bn worth of dividends in May. Commonwealth Bank shareholders recently received their interim dividends.

CORPORATES
AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY, BANK OF QUEENSLAND LIMITED – ASX BOQ, WESTPAC BANKING CORPORATION – ASX WBC, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA

Earnings haven’t been revised low enough

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Original article by William McInnes
The Australian Financial Review – Page: 31 : 8-Apr-20

Earnings per share forecasts for S&P/ASX 200 companies have been reduced by seven per cent since February, due to the impact of the coronavirus pandemic. Macquarie argues that this downgrade is too small, given that Australia’s GDP growth is expected to contract in 2020; the broker adds that the financial market appears to have priced in a much higher decline. Macquarie notes that forecasts are difficult at present as many listed companies have withdrawn their earnings guidance in response to the pandemic.

CORPORATES
STANDARD AND POOR’S ASX 200 INDEX, MACQUARIE GROUP LIMITED – ASX MQG

Reserve Bank likely to slow bond buying

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Original article by Jonathan Shapiro
The Australian Financial Review – Page: 30 : 7-Apr-20

The Reserve Bank of Australia’s quantitative easing program commenced on 20 March, and the central bank initially began purchasing $5bn worth of commonwealth government bonds per day. It has bought some $31bn of such bonds to date, including $10bn in the week ended 3 April. The RBA has been gradually been winding back its bond buying, and Damien McColough of Westpac says that even if its current momentum is maintained it would hold about $80bn worth of government bonds by the end of June. This would constitute about 30 per cent of the government bonds on issue. The RBA has also bought some $5bn worth of state government bonds.

CORPORATES
RESERVE BANK OF AUSTRALIA, WESTPAC BANKING CORPORATION – ASX WBC

Non-banks clamp down on new loans

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Original article by Joyce Moullakis
The Australian – Page: 13 & 14 : 6-Apr-20

Non-bank lender Pepper Australia has increased its home loan interest rates and tightened its credit criteria as it assesses the impact of the coronavirus on its operations. Pepper will stop offering construction loans and will require a bigger deposit for commercial loans, while larger deposits will also be needed for its two types of home loans. Fellow non-bank lender Bluestone has also introduced new credit criteria as well as increasing the rates on all of its loan products by 35 basis points.

CORPORATES
PEPPER AUSTRALIA PTY LTD, BLUESTONE GROUP PTY LTD

Bankers ready for GFC-style raising spree

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Original article by Anthony Macdonald, Sarah Thompson
The Australian Financial Review – Page: 15 & 20 : 6-Apr-20

Australian companies are looking to equity funding to assist them through the COVID-19 pandemic, and private equity firms are eager to participate in possible transactions. The ASX has temporarily amended its listing rules to allow companies to raise more funds via non-renounceable rights issues and share placements, while coronavirus-impacted companies that are tipped to undertake equity raisings include Virgin Australia, Sydney Airport and Tabcorp.

CORPORATES
ASX LIMITED – ASX ASX, VIRGIN AUSTRALIA HOLDINGS LIMITED – ASX VAH, SYDNEY AIRPORT – ASX SYD, TABCORP HOLDINGS LIMITED – ASX TAH, WEBJET LIMITED – ASX WEB, FLIGHT CENTRE TRAVEL GROUP LIMITED – ASX FLT, SOUTHERN CROSS MEDIA GROUP LIMITED – ASX SXL, CORPORATE TRAVEL MANAGEMENT LIMITED – ASX CTD, BORAL LIMITED – ASX BLD, JAMES HARDIE INDUSTRIES PLC – ASX JHX, KATHMANDU HOLDINGS LIMITED – ASX KMD, NEXTDC LIMITED – ASX NXT, COCHLEAR LIMITED – ASX COH

Big super warns of cash-in risk

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Original article by Joanna Mather, Tony Boyd, Aleks Vickovich
The Australian Financial Review – Page: 1 & 8 : 3-Apr-20

Treasury has forecast that about $27bn in total will be withdrawn from superannuation funds after the federal government relaxed the rules governing early access for people who have been impacted by the pandemic. AustralianSuper CEO Ian Silk notes that industry estimates suggest that withdrawals could top $50bn. He adds that some super funds may struggle to cope with a big increase in withdrawals, but stresses that it will not be an issue for AustralianSuper. Silk also warns that a surge in withdrawals will affect the super industry’s capacity to invest in and recapitalise businesses when the crisis abates.

CORPORATES
AUSTRALIANSUPER PTY LTD

Westpac chief Peter King eyes fast restart

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Original article by James Frost
The Australian Financial Review – Page: 1 & 20 : 3-Apr-20

Westpac has appointed Peter King as CEO for the next two years. King, who has been acting CEO since September, says 22,000 of Westpac’s 33,000 employees are now working from home in response to the coronavirus; typically it is around 1,000. Westpac has had 100,000 requests for assistance from customers and 26,000 requests for help from small businesses since the banking sector launched its response to the virus. King says Westpac will looking at businesses that can recover quickly once the worst of COVID-19 is over in terms of the ones it decides to assist.

CORPORATES
WESTPAC BANKING CORPORATION – ASX WBC

Reserve Bank could lend money to super funds to help cover coronavirus withdrawals

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Original article by Ben Butler
The Guardian – Page: Online : 31-Mar-20

The federal government has predicted that as much as $27 billion could be withdrawn from super funds under rules allowing people who lose their jobs as a result of COVID-19 to withdraw up to $20,000, but some funds suggest that it could be as much as $60 billion. The Reserve Bank is understood to be working out how it might set up a government-backed facility to assist funds to pay withdrawals, although Treasurer Josh Frydenberg has thus far rejected the idea. The government’s decision to introduce a wage subsidy to keep people in work could mean the level of withdrawals may not be as great as previously forecast.

CORPORATES
RESERVE BANK OF AUSTRALIA, AUSTRALIA. DEPT OF THE TREASURY