K: Financial and Insurance Services

Gen Z threatens $1.7b of bank card revenue

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

Macquarie Group expects a further decline in credit card lending and revenue over the medium-term, as consumers continue to embrace alternative payment methods. Credit cards and payments account for some $1.7bn of major Australian banks’ revenue, and Macquarie believes that up to 45 per cent of this could be at risk due to the growth of ‘buy now, pay later platforms’ and other payment solutions. German notes that banks are also facing growing competition from fintechs in the foreign exchange market.

CORPORATES
MACQUARIE GROUP LIMITED – ASX MQG

How CSL and BHP helped drive the index above 7000

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Original article by William McInnes
The Australian Financial Review – Page: 27 : 17-Jan-20

The S&P/ASX 200 has taken just over two years to rise from 6,000 points to its new record high of 7,000. The index rose above 6,000 for the first time since the global financial crisis on 7 November 2017. BHP and CSL have been the biggest contributors to the S&P/ASX’s 200 rally since this time, adding 200 and 277 points respectively to the benchmark. Shares in CSL were trading at just $144.59 in November 2017, and the stock rose above $300 for the first time on 16 January.

CORPORATES
STANDARD AND POOR’S ASX 200 INDEX,{SPAC}BHP GROUP LIMITED – ASX BHP,{SPAC}CSL LIMITED – ASX CSL

Meet Macquarie: The $50bn investment bank

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Original article by Joyce Moullakis
The Australian – Page: 15 & 21 : 17-Jan-20

Macquarie Group’s shares closed 1.4 per cent higher at a record $143.47 on 16 January; this compares with just $14.75 in early 2009, as the global financial crisis took its toll on investment banks. Macquarie now boasts a market capitalisation of $50.85bn, while it has more than $560bn worth of asset under management. Macquarie posted a profit of $1.46bn for the six months to September, an increase of 11 per cent, although CEO Shemara Wikramanayake has flagged a lower full-year profit than previously.

CORPORATES
MACQUARIE GROUP LIMITED – ASX MQG

RBA warns on buy now, pay later dangers

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Original article by Gerard Cockburn
The Australian – Page: 14 : 16-Jan-20

Documents released under Freedom of Information laws shows that the Reserve Bank of Australia had expressed concern about the growth of ‘buy now, pay later’ platforms in March 2019. The internal memorandum cautioned that the rapid growth in such platforms is beginning to present a risk to financial stability, and noted that some consumers may not fully understand the risks associated with these platforms. However, the central bank also concluded that buy now, pay later services can be more beneficial to some consumers than credit cards.

CORPORATES
RESERVE BANK OF AUSTRALIA, AFTERPAY LIMITED – ASX APT, ZIP CO LIMITED – ASX Z1P, GOLDMAN SACHS AUSTRALIA PTY LTD

Windfall for super on share upsurge

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Original article by David Rogers, Gerard Cockburn
The Australian – Page: 13 & 18 : 16-Jan-20

Data from SuperRatings shows that the median balanced superannuation fund achieved a return of 13.8 per cent in 2019, for the best calendar-year gain since 2013. SuperRatings’ executive director Kirby Rappell says investors should not expect a similar return in 2020, although he expects the sector to perform well again. Rappell adds that consolidation in the super industry is likely to continue in 2020, and the sustainability of operating expenses will be a key issue for funds of all sizes. The average super fund has returned 7.7 per cent over the last decade.

CORPORATES
SUPERRATINGS PTY LTD, AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY

Open banking rules too tough, say start-ups

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Original article by James Eyers
The Australian Financial Review – Page: 13 & 16 : 15-Jan-20

The Australian Competition & Consumer Commission is responsible for the accreditation of financial services providers under the federal government’s ‘open banking’ regime. However, Fintech Australia has criticised the complexity of the process, and notes that it is expected to cost financial technology companies between $50,000 and $100,000 to gain accreditation. Fintech Australia contends that this cost will be prohibitive for many business start-ups. The open banking regime will commence in July, after initially being slated to begin in February.

CORPORATES
FINTECH AUSTRALIA PTY LTD, AUSTRALIAN COMPETITION AND CONSUMER COMMISSION

Health funds fear surge in fire claims

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Original article by Jared Lynch
The Australian – Page: 15 & 16 : 15-Jan-20

Private health insurers expect the bushfire crisis to result in a sharp increase in insurance claims, particularly from customers who have been affected by the smoke haze. However, they say it is too soon to determine the exact impact of the fires. Latrobe Health Services CEO Ian Whitehead anticipates a big increase in claims related to mental health issues arising from the bushfires, as well as physical health problems. Australian Medical Association president Tony Bartone says the longer-term effects of inhaling hazardous smoke will not be known for some time.

CORPORATES
LATROBE HEALTH SERVICES, AUSTRALIAN MEDICAL ASSOCIATION LIMITED, BUPA AUSTRALIA PTY LTD, MEDIBANK PRIVATE LIMITED – ASX MPL, AUSTRALIAN UNITY LIMITED

Investors ready to turn savage

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Original article by Melissa Yeo
The Australian – Page: 21 : 15-Jan-20

The sharemarket rally has seen the S&P/ASX 200’s price-to-earnings multiple rise to a record high of 18 times. Mirrabooka Investments’ MD Mark Freeman says high valuations means that stocks which fail to meet expectations in the February reporting season will be punished by investors. Meanwhile, Mirrabooka has reported a 2019-20 interim profit of $4.4m, compared with $4.6m previously. Shareholders will receive a first-half dividend of $0.35 per share.

CORPORATES
MIRRABOOKA INVESTMENTS LIMITED – ASX MIR, STANDARD AND POOR’S ASX 200 INDEX

Westpac pays bushfire mortgages

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Original article by Cliona O’Dowd
The Australian – Page: 1 & 4 : 14-Jan-20

Westpac has revealed details of its support package for victims of the nation’s bushfire crisis. Amongst other things, the bank will make mortgage repayments on behalf of customers whose primary residence was lost in the bushfires. This will apply for one year, and payments will be capped at $1,200 per month. Personal customers will also receive interest-free loans to cover the gap between insurance payouts and rebuilding costs, and business customers will be offered low-interest loans. Westpac and its major rivals have also made large donations to bushfire relief appeals.

CORPORATES
WESTPAC BANKING CORPORATION – ASX WBC, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, RED CROSS SOCIETY, S&P GLOBAL RATINGS

Banks to bear cost of blazes: Morgan Stanley

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Original article by Cliona O’Dowd
The Australian – Page: 13 & 16 : 14-Jan-20

Morgan Stanley has warned that the bushfires crisis will have a direct financial cost on Australian banks, including an increase in insurance claims and loan losses. S&P expects loan arrears to increase in the wake of the bushfires, although rival ratings agency Moody’s says the proportion of loans that are affected by the bushfires is likely to be relatively small. Morgan Stanley adds that factors such as the impact of the bushfires on retail spending will have the biggest impact on bank earnings.

CORPORATES
MORGAN STANLEY AUSTRALIA LIMITED, S&P GLOBAL RATINGS, MOODY’S INVESTORS SERVICE INCORPORATED