K: Financial and Insurance Services

Look beyond bank shares to grow wealth: fund managers

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Original article by Lucas Baird
The Australian Financial Review – Page: 29 : 3-May-19

National Australia Bank reduced its interim dividend by 16 per cent on 2 May, but Andrew Martin of Alphinity Investment Management does not expect further dividend cuts in the banking sector. He adds that a credit crunch would be a key driver for any future dividend cuts. Prasad Patkar of Platypus Asset Management says the ‘golden era’ for Australian bank shares ended in the wake of the global financial crisis, rather than the Hayne royal commission, and investors should consider other investment options.

CORPORATES
NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, ALPHINITY INVESTMENT MANAGEMENT PTY LTD, PLATYPUS ASSET MANAGEMENT PTY LTD, AUSTRALIA. ROYAL COMMISSION INTO MISCONDUCT IN THE BANKING, SUPERANNUATION AND FINANCIAL SERVICES INDUSTRY, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, WESTPAC BANKING CORPORATION – ASX WBC

RBA set to cut, Macquarie predicts

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Original article by Sarah Turner
The Australian Financial Review – Page: 29 : 3-May-19

Inflation remains well below the Reserve Bank’s target range of 2-3 per cent, and Ric Deverell of Macquarie Group notes that it is continuing to trend lower. He says the inflation outlook is the key factor that will prompt the Reserve Bank to reduce official interest rates by 25 basis points on 7 May. Deverell adds that a rate cut will have more impact while the unemployment rate is low rather than if the central bank waits until it rises.

CORPORATES
RESERVE BANK OF AUSTRALIA, MACQUARIE GROUP LIMITED – ASX MQG

ANZ to cut $1bn in search of growth

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Original article by Joyce Moullakis
The Australian – Page: 17 & 22 : 2-May-19

The ANZ Bank has posted a 2018-19 interim cash profit of $3.56bn, which is two per cent higher than previously. The result for the six months to 31 March included provision for $175m worth of remediation charges. CEO Shayne Elliott has flagged further cost-cutting measures in coming years, although he has downplayed talk of further staff cuts and branch closures. Meanwhile, Elliott says the banking sector’s mortgage loan repayment buffer of 7.25 per cent should be revised, given that the cash rate is just 1.5 per cent at present.

CORPORATES
AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, WESTPAC BANKING CORPORATION – ASX WBC, TRIBECA INVESTMENT PARTNERS PTY LTD, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA

Big four reap gains and reward contrarians

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Original article by David Rogers
The Australian – Page: 28 : 2-May-19

The S&P/ASX 200 Banks Index has gained nearly 15 per cent since late December, following a sell-off in the wake of the misconduct exposed by the Hayne royal commission. Tony Brennan of Citigroup says bank stocks still represent a buying opportunity for investors, even though the sector continues to face headwinds. Meanwhile, JP Morgan notes that banks’ revenue may come under pressure if the cash rate is reduced more than once in coming months.

CORPORATES
STANDARD AND POOR’S ASX 200 BANKS INDEX, STANDARD AND POOR’S ASX 200 INDEX, CITIGROUP PTY LTD, JP MORGAN AUSTRALIA LIMITED, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, WESTPAC BANKING CORPORATION – ASX WBC, MACQUARIE GROUP LIMITED – ASX MQG, CREDIT SUISSE (AUSTRALIA) LIMITED

Keep RBA’s rate trigger away from politics

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Original article by Perry Williams, Joyce Moullakis
The Australian – Page: 17 & 22 : 2-May-19

APA Group’s Mick McCormack has weighed into the debate on the outlook for monetary policy, saying the Reserve Bank should not reduce the cash rate in May. He argues that a rate cut during an election campaign would "inevitably" become politicised. ANZ Bank CEO Shayne Elliott also believes that an interest rate cut is needed in May, and a number of economists have forecast a rate cut. However, financial markets have priced in a 44 per cent chance of a rate cut at the central bank’s monthly board meeting.

CORPORATES
APA GROUP – ASX APA, RESERVE BANK OF AUSTRALIA, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, JP MORGAN AUSTRALIA LIMITED, RBC CAPITAL MARKETS, MACQUARIE GROUP LIMITED – ASX MQG, UBS HOLDINGS PTY LTD, MORGANS FINANCIAL LIMITED, TD SECURITIES, CAPITAL ECONOMICS LIMITED, CITIGROUP PTY LTD, NOMURA AUSTRALIA LIMITED

Westpac to take $753m earnings hit

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Original article by Richard Gluyas
The Australian – Page: 19 : 1-May-19

Westpac has advised that its 2018-19 interim cash profit will be marred by writedowns totalling $753m. The bank has increased its half-year provisions for customer remediation by $357m, to $617m in total. Westpac’s financial accounts will also include provisions totalling $136m in relation to the restructuring of its wealth division. Westpac will report its half-year results on 6 May. The ANZ Bank and National Australia Bank will also release their interim results in coming days.

CORPORATES
WESTPAC BANKING CORPORATION – ASX WBC, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, BT FINANCIAL GROUP PTY LTD, AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION, AMP LIMITED – ASX AMP, MACQUARIE GROUP LIMITED – ASX MQG, VIRIDIAN ADVISORY PTY LTD

Investors wary in peak profit warning season

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Original article by David Rogers
The Australian – Page: 28 : 1-May-19

Matthew Ross of Goldman Sachs anticipates an increase in profit warnings ahead of the end of the 2018-19 financial year. He adds that factors such as the federal election will make it hard for listed companies to increase earnings momentum leading into the second half of the calendar year. However, Ross notes that despite a decline in profit margins in the last 18 months, the EBIT margins of 80 per cent of companies remained above long-term averages during the first half of 2018-19.

CORPORATES
GOLDMAN SACHS AUSTRALIA PTY LTD, WESTPAC BANKING CORPORATION – ASX WBC, SEEK LIMITED – ASX SEK

The votes are in: Macquarie joins calls for an early cut in interest rates

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Original article by Perry Williams, David Rogers
The Australian – Page: 17 & 27 : 30-Apr-19

The chances of a reduction in the cash rate in May is around 50 per cent, according to financial market pricing. However, a growing number of economists expect the Reserve Bank of Australia to ease monetary policy in May. Macquarie Group is the latest to forecast a rate cut in May, and chief economist Ric Deverell says the RBA is unlikely to be unduly concerned about reducing the cash rate during an election campaign. Macquarie says the central bank might also reduce its GDP growth and inflation forecasts at the monthly board meeting.

CORPORATES
RESERVE BANK OF AUSTRALIA, MACQUARIE GROUP LIMITED – ASX MQG, JP MORGAN AUSTRALIA LIMITED, ROYAL BANK OF CANADA, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, UBS HOLDINGS PTY LTD, CAPITAL ECONOMICS LIMITED, CITIGROUP PTY LTD, TD SECURITIES, NOMURA AUSTRALIA LIMITED, WESTPAC BANKING CORPORATION – ASX WBC

Confession season to give rally a reality check

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Original article by David Rogers
The Australian – Page: 27 : 30-Apr-19

The Australian sharemarket has had its best start to a calendar year since 1991, despite retreating on 29 April. However, the banks’ reporting season will be the next key test for the local bourse, along with trading updates from other listed companies. Meanwhile, the consensus forecast for growth in earnings per share in 2019 is 2.8 per cent, compared with 8.4 per cent at the same time in 2018.

CORPORATES
STANDARD AND POOR’S ASX 200 INDEX, STANDARD AND POOR’S 500 INDEX, SHANGHAI COMPOSITE INDEX, MORGAN STANLEY AUSTRALIA LIMITED, CITIGROUP INCORPORATED

McEwan’s RBS exit fuels NAB CEO talk

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Original article by Richard Gluyas
The Australian – Page: 17 & 20 : 26-Apr-19

There is growing speculation that Ross McEwan is a contender to succeed Andrew Thorburn as CEO of National Australia Bank, following his resignation as CEO of the Royal Bank of Scotland. McEwan has been CEO of RBS since 2013, and it has returned to profitability and reinstated dividends under his leadership. Mike Baird and Anthony Healy are widely seen as the leading internal candidates to replace Thorburn, who resigned in February.

CORPORATES
NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, ROYAL BANK OF SCOTLAND GROUP PLC, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, RUSSELL REYNOLDS ASSOCIATES INCORPORATED, MEDIBANK PRIVATE LIMITED – ASX MPL