K: Financial and Insurance Services

Balanced super ahead for 10th year

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Original article by Natasha Gillezeau
The Australian Financial Review – Page: 8 : 17-Jun-19

Data from SuperRatings shows that the average balanced superannuation fund achieved a return of -0.7 per cent in May. However, the average return for balanced options so far in 2018-19 is 5.1 per cent, putting the sector on track to deliver a positive return for the financial year. SuperRatings executive director Kirby Rappell notes that the return for median balanced super funds is about 8.5 per cent over the last 10 years.

CORPORATES
SUPERRATINGS PTY LTD

Rate cut may lead to riskier investing

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Original article by Sarah Turner
The Australian Financial Review – Page: 31 : 13-Jun-19

Anthony Doyle of Fidelity International says Australian savers are likely to seek out higher-yielding and higher-risk investments following the Reserve Bank’s decision to reduce the cash rate to a new low of 1.25 per cent. He notes that there was a similar trend in the UK following the global financial crisis, with Britain’s cash rate reaching a low of just 25 basis points. Doyle also expects the search for yield to bolster Australia’s corporate bond market.

CORPORATES
FIDELITY INTERNATIONAL PTY LTD, RESERVE BANK OF AUSTRALIA, M&G INVESTMENT MANAGEMENT LIMITED

Stockmarket boosted as Prospa prospers on debut

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Original article by Joyce Moullakis
The Australian – Page: 21 : 12-Jun-19

Prospa Group’s joint CEO Beau Bertoli is upbeat about the outlook for the small business lending market, despite the slowing Australian economy. The fintech specialises in loans of between $5,000 and $300,000, and Bertoli say there is a lot of unmet demand for small business loans. Prospa’s shares peaked at $4.55 on the stock’s first day of trading on 11 June, having been issued at $3.78. Prospa has forecast a pro-forma net loss of $1.5m for fiscal 2019.

CORPORATES
PROSPA GROUP LIMITED – ASX PGL, REFINITIV, QUALITAS REAL ESTATE INCOME FUND – ASX QRI, LIFE360 INCORPORATED – ASX 360

Savers to be slugged $1.3b by rate cut

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Original article by James Frost
The Australian Financial Review – Page: 6 : 12-Jun-19

Data from Canstar shows that smaller banks have reduced their interest rates on at-call cash accounts by up to 30 basis points in the wake of the Reserve Bank’s official interest rate cut. The four major banks have yet to reduce their own rates on at-call accounts, but Finder’s Graham Cooke warns that is only a matter of time. It is estimated that savers’ income from the interest on at-call accounts will be slashed by around $1.3bn if the official interest rate cut is passed on in full.

CORPORATES
CANSTAR PTY LTD, RESERVE BANK OF AUSTRALIA, FINDER.COM.AU, AMP BANK LIMITED, SUNCORP BANK, BENDIGO AND ADELAIDE BANK LIMITED – ASX BEN, BANK AUSTRALIA, AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY, MACQUARIE CREDIT UNION LIMITED, RATECITY PTY LTD, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, WESTPAC BANKING CORPORATION – ASX WBC

Banks not passing on cut nothing new: Treasury

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Original article by Matthew Cranston, James Eyers
The Australian Financial Review – Page: 4 : 7-Jun-19

Westpac and ANZ have been criticised for withholding part of the Reserve Bank’s official interest rate cut. The central bank has cut the cash rate a total of 19 times since 2008, and analysis by the Treasury shows that there have been 13 occasions when at least one of the four major banks failed to pass on the full rate. The banks have also reduced their rates by a higher margin than the official interest rate cut on several occasions since the global financial crisis.

CORPORATES
RESERVE BANK OF AUSTRALIA, WESTPAC BANKING CORPORATION – ASX WBC, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, AUSTRALIA. DEPT OF THE TREASURY

Rate cut to spur ASX to even greater heights

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Original article by Sarah Turner
The Australian Financial Review – Page: 17 & 30 : 7-Jun-19

Australia’s benchmark S&P/ASX 200 has gained more than12 per cent so far in 2019, including a one per cent gain since the Reserve Bank reduced the cash rate on 4 June. The first interest rate cut in almost three years may provide the catalyst for further sharemarket gains, particularly given the higher yields at present from equities than bonds and cash products such as term deposits. There is also growing expectations of further monetary policy easing before the end of 2019.

CORPORATES
STANDARD AND POOR’S ASX 200 INDEX, RESERVE BANK OF AUSTRALIA, AMP CAPITAL INVESTORS LIMITED, JP MORGAN AUSTRALIA LIMITED

Ex-RBA deputy queries rate cut

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Original article by John Kehoe
The Australian Financial Review – Page: 1 & 6 : 6-Jun-19

Stephen Grenville was the Reserve Bank of Australia’s deputy governor when it introduced inflation targeting in 1996. However, he has questioned whether the inflation target of 2-3 per cent is still necessary, as well as the central bank’s decision to reduce the cash rate to a record low of 1.25 per cent. Grenville argues that there needs to be more focus on the role of fiscal policy in stimulating the economy. Inflation has been below the RBA’s target range for several years, but governor Philip Lowe says there is no need for any changes to the monetary policy framework at present.

CORPORATES
RESERVE BANK OF AUSTRALIA, LOWY INSTITUTE FOR INTERNATIONAL POLICY, OUTLOOK ECONOMICS, AUSTRALIA. DEPT OF THE TREASURY, INTERNATIONAL MONETARY FUND

Banks defy the Treasurer, RBA

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Original article by Matthew Cranston
The Australian Financial Review – Page: 1 & 4 : 5-Jun-19

Federal Treasurer Josh Frydenberg has criticised the ANZ Bank for reducing its variable mortgage interest rates by just 0.18, after the Reserve Bank of Australia cut the cash rate by 0.25 per cent to a record low of 1.25 per cent. Westpac has cut its variable rates by 0.20 per cent, while National Australia Bank and the Commonwealth Bank have passed the central bank’s full rate cut on to customers. RBA governor Philip Lowe also says the major banks should reduce their mortgage rates by the full amount, given that their wholesale funding costs have fallen significantly.

CORPORATES
AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, WESTPAC BANKING CORPORATION – ASX WBC, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, RESERVE BANK OF AUSTRALIA, AUSTRALIA. DEPT OF THE TREASURY, AUSTRALIAN LABOR PARTY, JP MORGAN AUSTRALIA LIMITED

Boards feel the pinch on pay as Hayne fallout hits home

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Original article by Eli Greenblat
The Australian – Page: Online : 4-Jun-19

A new survey shows that company secretaries in the financial services sector have received an average pay rise of 24 per cent in 2018-19. In contrast, the remuneration of directors and chairpersons in the industry have fallen by 11 per cent in the wake of the Hayne royal commission. Likewise, the remuneration of CEOs in the sector fell by 21 per cent and managing directors’ pay was cut by 10 per cent. The survey was undertaken by the Governance Institute, in partnership with McGuirk Consultants and Board Direction.

CORPORATES
GOVERNANCE INSTITUTE OF AUSTRALIA LIMITED, McGUIRK MANAGEMENT CONSULTANTS PTY LTD, BOARD DIRECTION, AUSTRALIA. ROYAL COMMISSION INTO MISCONDUCT IN THE BANKING, SUPERANNUATION AND FINANCIAL SERVICES INDUSTRY

Banks told: hand over RBA cut

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Original article by Matthew Cranston
The Australian Financial Review – Page: 1 & 4 : 4-Jun-19

The Reserve Bank of Australia is widely expected to reduce official interest rates from 1.50 per cent to 1.25 per cent on 4 June. A cut in rates would mean an end to the longest period of unchanged interest rates in the history of the RBA. Treasurer Josh Frydenberg, who has met with the banks in recent days to discuss issues such as interest rates and the federal government’s proposed securitisation fund, has called on them to pass on any rates cut in fall. However, former RBA board member Warwick McKibbin has urged it not to cut rates, while Don Hamson from Plato Investment Management says any cut in rates would result in increased demand for dividend-paying shares.

CORPORATES
RESERVE BANK OF AUSTRALIA, AUSTRALIA. DEPT OF THE TREASURY, PLATO INVESTMENT MANAGEMENT LIMITED, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, WESTPAC BANKING CORPORATION – ASX WBC, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, FRANKLIN TEMPLETON ASSET MANAGEMENT LIMITED, CORELOGIC AUSTRALIA PTY LTD, JP MORGAN AUSTRALIA LIMITED, DELOITTE TOUCHE TOHMATSU LIMITED