K: Financial and Insurance Services

Global dividends on the rise

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Original article by David Rogers
The Australian – Page: 27 : 8-Feb-19

Data from Plato Investment Management shows that dividends increased across the majority of developed markets in 2018, with a total payout to shareholders of $1.8trn. Globally, companies in the information technology sector increased their dividends by 33 per cent in the December quarter, followed by consumer staples (up 17.9 per cent). The global materials sector is the only one that did not record growth in dividend payments. In contrast, Australia’s materials sector recorded year-on-year dividend growth of 26 per cent.

CORPORATES
PLATO INVESTMENT MANAGEMENT LIMITED, STANDARD AND POOR’S ASX 300 INDEX, BROADCOM CORPORATION, VISA INTERNATIONAL

Contractor stuns AMP with identity data theft

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Original article by James Frost, Misa Han
The Australian Financial Review – Page: 21 : 8-Feb-19

Former AMP contractor Yi Zheng has pleaded guilty to possessing identity information to commit an indictable offence. Police records reveal that he downloaded 20 identity documents one morning in October when working at AMP’s Kent Street office in Sydney, then sent them to his home email account before deleting them from his desktop. After AMP’s security system revealed that Zheng had downloaded a dark-web browser onto his AMP laptop, the laptop was taken from him and he was escorted from the building. He was later arrested at Sydney Airport when trying to flee to China. Zheng will be sentenced on 21 March.

CORPORATES
AMP LIMITED – ASX AMP

Lowe shortens the odds for a Cup Day cut

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Original article by David Rogers
The Australian – Page: 27 : 8-Feb-19

A growing number of economists expect the Reserve Bank of Australia to reduce the cash rate by the end of 2019, although the general consensus is that interest rates will remain on hold. Meanwhile, financial market traders have priced in a 56 per cent chance of a rate cut by November, compared with just 34 per cent two days ago. UBS now expects the cash rate to be reduced by 25 basis points in November, with a further rate cut in the first half of 2020. However, the Commonwealth Bank expects the next movement in the cash rate to be up, in November 2020.

CORPORATES
RESERVE BANK OF AUSTRALIA, UBS HOLDINGS PTY LTD, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, STANDARD AND POOR’S ASX 200 INDEX

Finance Royal Commission likely to disrupt distribution of financial products

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

Financial intermediaries (including mortgage brokers and financial planners) currently account for the distribution of 35% of the total value of the major financial products. A number of the recommendations of the Financial Services Royal Commission relate to mortgage brokers and financial planners and if adopted, are likely to negatively impact their usage, particularly as it relates to borrowers rather than the lenders paying fees. Financial planners are also likely to be impacted by the need for greater fee disclosure, clarification of independence, improved focus on the best interests of the customer and the need to provide service for any fee involved. These are some of the latest findings from Roy Morgan’s Single Source survey in the 12 months to August 2018, which is based on in-depth interviews conducted face-to-face with over 50,000 consumers per annum in their homes, including detailed questioning across all aspects of investing, borrowing, insurance and banking.

CORPORATES
ROY MORGAN LIMITED, AUSTRALIA. ROYAL COMMISSION INTO MISCONDUCT IN THE BANKING, SUPERANNUATION AND FINANCIAL SERVICES INDUSTRY

Comyn confident about house prices

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Original article by Joyce Moullakis, Michael Roddan
The Australian – Page: 21 : 7-Feb-19

The Commonwealth Bank has posted a 2018-19 interim cash profit of $4.77bn, which is 2.1 per cent lower than previously. Mortgage and business lending rose by four per cent and five per cent respectively during the half-year, while lending margins were affected by factors such as increased competition and rising funding costs. Meanwhile, CEO Matt Comyn forecasts that growth in housing credit will slow in 2019, although he does not anticipate a sharp decline in house prices.

CORPORATES
COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, RESERVE BANK OF AUSTRALIA, CORELOGIC AUSTRALIA PTY LTD, UBS HOLDINGS PTY LTD

Local banks have world-beating profits

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Original article by Michael Roddan
The Australian – Page: 21 : 7-Feb-19

Reserve Bank governor Philip Lowe has noted that at around 13 per cent, Australian banks have a much higher return on equity than many of their international peers. He was unable to provide an explanation for this, but questioned whether local banks’ higher return on equity is sustainable. Meanwhile, ratings agency Moody’s says the Hayne royal commission’s failure to recommend breaking up the four major banks supports the "strong and stable profitability" of the banking sector.

CORPORATES
RESERVE BANK OF AUSTRALIA, AUSTRALIA. ROYAL COMMISSION INTO MISCONDUCT IN THE BANKING, SUPERANNUATION AND FINANCIAL SERVICES INDUSTRY, MOODY’S INVESTORS SERVICE INCORPORATED, AUSTRALIA. PRODUCTIVITY COMMISSION, AUSTRALIAN COMPETITION AND CONSUMER COMMISSION

Dollar dives as RBA keeps door open on rate cut

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Original article by David Rogers
The Australian – Page: 17 & 27 : 7-Feb-19

Reserve Bank of Australia governor Philip Lowe adopted a more dovish tone on monetary policy on 6 February. He used a National Press Club speech in Sydney to indicate that the RBA has the flexibility to reduce the cash rate if the outlook for unemployment and inflation makes such a move appropriate. The RBA had signalled in December that interest rates are more likely to rise than to fall. Lowe also said that the downturn in house prices is unlikely to affect economic growth.

CORPORATES
RESERVE BANK OF AUSTRALIA, STANDARD AND POOR’S ASX 200 INDEX, JP MORGAN AUSTRALIA LIMITED, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB

NAB bosses dig in: we’ll fix culture

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Original article by Joyce Moullakis
The Australian – Page: 1 & 5 : 6-Feb-19

Brett Le Mesurier of Shaw & Partners expects National Australia Bank CEO Andrew Thorburn to resign by the end of February, followed by chairman Ken Hendy later in the year. However, Thorburn has indicated that he will remain in his role despite attracting criticism in the final report of the financial services royal commission. He also says NAB will review and revise its strategy to improve its culture and governance.

CORPORATES
NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, SHAW AND PARTNERS LIMITED, AUSTRALIA. ROYAL COMMISSION INTO MISCONDUCT IN THE BANKING, SUPERANNUATION AND FINANCIAL SERVICES INDUSTRY, AUSTRALIAN FOUNDATION INVESTMENT COMPANY LIMITED – ASX AFI

Banks surge after royal pardon

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Original article by David Rogers, Richard Gluyas
The Australian – Page: 19 & 23 : 6-Feb-19

Jon Mott of UBS has described the final report of the financial services royal commission as a "clear win" for Australia’s banks, saying its recommendations did not meet market expectations. Investors agreed, with shares in the banks and wealth managers AMP and IOOF Holdings rallying on 5 February. Brian Johnson of CLSA says bank stocks could rise further, as the market had priced in more onerous recommendations by commissioner Kenneth Hayne.

CORPORATES
UBS HOLDINGS PTY LTD, AUSTRALIA. ROYAL COMMISSION INTO MISCONDUCT IN THE BANKING, SUPERANNUATION AND FINANCIAL SERVICES INDUSTRY, CLSA AUSTRALIA PTY LTD, AMP LIMITED – ASX AMP, IOOF HOLDINGS LIMITED – ASX IFL, STANDARD AND POOR’S ASX 200 INDEX, 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, AUSTRALIAN FINANCE GROUP LIMITED – ASX AFG, MORTGAGE CHOICE LIMITED – ASX MOC, MORGAN STANLEY AUSTRALIA LIMITED, MACQUARIE GROUP LIMITED – ASX MQG, MOODY’S INVESTORS SERVICE INCORPORATED, S&P GLOBAL RATINGS

Next rates move still up, RBA insists

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Original article by David Rogers, James Glynn
The Australian – Page: 19 & 28 : 6-Feb-19

The Reserve Bank of Australia has downgraded its forecast for economic growth in 2019 from 3.25 per cent to around three per cent, after leaving the cash rate unchanged at 1.5 per cent. The central bank has also advised that it now expects the unemployment rate to fall to around 4.75 per cent over the next several years, while it forecasts an underlying inflation rate of two per cent in 2019. Analysts expect official interest rates to remain on hold for some time.

CORPORATES
RESERVE BANK OF AUSTRALIA, WESTPAC BANKING CORPORATION – ASX WBC, UNITED STATES. FEDERAL RESERVE BOARD, EUROPEAN CENTRAL BANK, AUSTRALIAN BUREAU OF STATISTICS