K: Financial and Insurance Services

APRA lowers capital targets for banks

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Original article by Jonathan Shapiro, James Fernyhough
The Australian Financial Review – Page: 19 : 10-Jul-19

The Australian Prudential Regulation Authority has scaled its near-term target for the amount of capital the nation’s banks will be required to hold. APRA had initially proposed that banks would have to increase their total capital by 4-5 percentage points by January 2024, but it has reduced this to three percentage points in response to industry feedback. However, it will require banks to meet the higher target in the longer-term.

CORPORATES
AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, WESTPAC BANKING CORPORATION – ASX WBC, MOODY’S INVESTORS SERVICE INCORPORATED

Big four in great rate cuts rip-off

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Original article by Adam Creighton, David Tanner
The Australian – Page: 1 & 6 : 10-Jul-19

The gap between the cash rate and the average variable mortgage interest rate of Australia’s major banks was consistently around 1.8 percentage points between 1997 and 2007. However, this gap has widened significantly since then, and the two consecutive official interest rate cuts has increased it to a 25-year high of 3.94 percentage points. The banks contend that factors such as rising funding costs, capital requirements and increased regulation mean it has become more difficult to move in tandem with the Reserve Bank.

CORPORATES
RESERVE BANK OF AUSTRALIA, WESTPAC BANKING CORPORATION – ASX WBC, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, AUSTRALIA. PRODUCTIVITY COMMISSION, AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY, AUSTRALIAN COMPETITION AND CONSUMER COMMISSION

Rate cuts push investors into risky territory

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Original article by David Rogers
The Australian – Page: 25 : 10-Jul-19

Australia’s benchmark S&P/ASX 200 recorded its third-biggest loss for 2019 on 8 July, after gaining two per cent in the previous week and about 25 per cent in the last six months. The rally in global sharemarkets during 2019 has been driven by central banks’ shift towards a monetary policy easing bias. The downturn in official interest rates is prompting more investors to embrace higher-risk asset classes, which in turn can increase market risk.

CORPORATES
STANDARD AND POOR’S ASX 200 INDEX, JP MORGAN AND COMPANY INCORPORATED, RESERVE BANK OF AUSTRALIA, UNITED STATES. FEDERAL RESERVE BOARD

Morgan Stanley puts cat among the pigeons

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Original article by David Rogers
The Australian – Page: 28 : 9-Jul-19

The S&P/ASX 200 recorded its third-biggest daily loss for 2019 on 8 July, after gaining two per cent in the previous week. Morgan Stanley’s move to downgrade its equity market recommendation from ‘equalweight’ to ‘underweight’ contributed to the pullback, and Andrew Sheets of Morgan Stanley says the investment bank’s global equity weight is now at its lowest since coverage began in 2014. Meanwhile, with the US earnings season set to begin shortly, Tobias Levkovich of Citigroup says consensus estimates for earnings in the June quarter could be too low.

CORPORATES
STANDARD AND POOR’S ASX 200 INDEX, MORGAN STANLEY AND COMPANY INCORPORATED, CITIGROUP INCORPORATED, STANDARD AND POOR’S 500 INDEX, RESERVE BANK OF AUSTRALIA, UNITED STATES. FEDERAL RESERVE BOARD, EUROPEAN CENTRAL BANK

Local staff to be hit hard in Deutsche cull

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Original article by Joyce Moullakis, Bridget Carter
The Australian – Page: 17 & 22 : 9-Jul-19

Deutsche Bank’s decision to close its global equity division will result in the loss of at least 50 jobs in Australia. The move will affect staff working in equities trading, sales, ­research and ­equity capital markets, while sources have indicated that jobs in its advisory operations will also be cut. Deutsche’s exit from equities trading is part of a broader restructuring which will result in the loss of 18,000 jobs worldwide. Restructuring costs are forecast to result in Deutsche posting a loss of EUR2.8bn for the second quarter.

CORPORATES
DEUTSCHE BANK AG, NOMURA AUSTRALIA LIMITED, CIMB SECURITIES INTERNATIONAL (AUSTRALIA) PTY LTD, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, CLSA AUSTRALIA PTY LTD, JEFFERIES AND COMPANY, WILSONS ADVISORY AND STOCKBROKING LIMITED, CRAIGS INVESTMENT PARTNERS LIMITED

Lending laws no problem, ASIC insists

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Original article by Michael Roddan
The Australian – Page: 17 & 18 : 8-Jul-19

The Australian Securities & Investments Commission has been blamed in some areas for falling house prices and a decline in credit growth, due to a perception that it is taking a tougher approach to responsible lending. However, ASIC commissioner Sean Hughes notes that responsible lending laws have not changed since 2010, nor has its guidance in this area. ASIC advised in February that it will release an updated guidance note on responsible lending by September.

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

Industry Funds increasing lead in satisfaction over Retail Funds – Unisuper the top performer

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Original article by Roy Morgan
Market Research Update – Page: Online : 8-Jul-19

New research by Roy Morgan shows that in the six months to May 2019, satisfaction with the financial performance of industry superannuation funds was 62.5% (up 0.5% points from the same period 12 months ago), compared with 56.5% for retail super funds (down 3.7% points). Satisfaction with retail funds was 1.8% below that of industry funds in 2018, and this gap has now increased to 6.0%. Ten of the top 12 performing super funds in May 2019, based on member satisfaction with their financial performance, were industry funds. The highest rating was for Unisuper (70.9%), followed by Tasplan on 69.6%. The only two retail funds to make it to the top 12 were Macquarie with 66.6% and Mercer on 64.3%. These results are from the newly released Roy Morgan report ‘Satisfaction with Financial Performance of Superannuation in Australia’, May 2019 edition. The data in this report represents some of the findings from Roy Morgan’s Single Source survey, which is based on in-depth interviews conducted face-to-face with over 50,000 consumers per annum in their homes, including over 30,000 with superannuation. These results are based on interviews conducted in the six months to May 2019.

CORPORATES
ROY MORGAN LIMITED, CATHOLIC SUPER, UNISUPER LIMITED, MACQUARIE SUPERANNUATION, COLONIAL FIRST STATE SUPER

Time is money as CBA waits on cuts

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Original article by Cliona O’Dowd
The Australian – Page: 21 & 24 : 5-Jul-19

The Commonwealth Bank’s decision to delay a 19 basis point reduction in its variable home loan interest rates until 23 July will boost its interest income by $43m. The other three major banks will also gain additional interest income from mortgage customers by delaying rate cuts by periods ranging from nine days to two weeks. It is estimated that the big four banks’ move to delay passing on the official interest rate cut in full or in part will boost their interest income by a combined $97m.

CORPORATES
COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, WESTPAC BANKING CORPORATION – ASX WBC, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, SHAW AND PARTNERS LIMITED, MOZO PTY LTD, HSBC AUSTRALIA HOLDINGS PTY LTD, FIRSTMAC LIMITED, ME BANK

Morgans knew of problems at branch

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Original article by Liam Walsh
The Australian Financial Review – Page: 15 & 20 : 5-Jul-19

Stockbroker Morgans is the subject of dozens of law suits from clients; over 20 of them are targeting Morgans and David Wilkins, the former head of its branch at Springwood in Queensland. Some clients of Morgans have claimed that they lost hundreds of thousands of dollars as a result of advice they received from Morgans’ Springwood office. An email sent in 2009 that is contained in one of the lawsuits against Morgans indicates that its senior management were aware that there were problems at the office, but the fir did not advise clients about its concerns.

CORPORATES
MORGANS FINANCIAL LIMITED, SUPREME COURT OF QUEENSLAND, AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION

ING home loan customers most satisfied just ahead of Bendigo Bank and Suncorp

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Original article by Roy Morgan
Market Research Update – Page: Online : 5-Jul-19

The satisfaction rating of the home loan customers of Australia’s big four banks was 71.1% in May, well below the 76.8% rating given by their non-home customers. The home loan customers of the other major banks all have much higher satisfaction than the big four and are closer to the rating given by their non-home loan customers. ING has the highest home loan customer satisfaction with 88.9%, followed by Bendigo Bank (86.2%) and Suncorp (81.0%). The CBA is the best performer among the big four with 72.5%, followed by Westpac (70.7%), NAB (70.4%) and ANZ (69.6%). These are some of the latest findings from Roy Morgan’s ‘Customer Satisfaction report on Consumer Banking in Australia’, May 2019. This report is based on in-depth interviews conducted face-to-face with over 50,000 consumers per annum in their homes and covers over two decades. The latest data in this release is for the six months to May 2019.

CORPORATES
ROY MORGAN LIMITED, ING BANK (AUSTRALIA) LIMITED, BENDIGO BANK, SUNCORP BANK, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, WESTPAC BANKING CORPORATION – ASX WBC, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ