K: Financial and Insurance Services

Banks could face another tough year

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Original article by Sarah Turner
The Australian Financial Review – Page: 17 : 10-Jan-19

The S&P/ASX 200 Banks Index shed 16.5 per cent in 2018, falling to its lowest level in five years. JCP Investment Partners is bearish about the outlook for the sector in 2019, warning that there is a 40-50 per cent chance of a banking crisis. However, Citigroup is more upbeat about the sector, and suggests that bank stocks may have been oversold.

CORPORATES
STANDARD AND POOR’S ASX 200 BANKS INDEX, JCP INVESTMENT PARTNERS LIMITED, CITIGROUP PTY LTD

Hurdles ahead, but ASX could reach 6000

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Original article by David Rogers
The Australian – Page: 18 : 9-Jan-19

The benchmark S&P/ASX 200 reached an intra-day high of 5,733.7 points on 8 January, having fallen to 5,410.2 points on 24 December. Morgan Stanley says the financial services royal commission, the upcoming federal election, the impact of falling house prices on consumer confidence and the outlook for the Chinese economy are key risks for the local bourse in the near-term. However, Chris Nicol and Daniel Blake of Morgan Stanley expect the market to rise above 6,000 points in 2019.

CORPORATES
STANDARD AND POOR’S ASX 200 INDEX, MORGAN STANLEY AUSTRALIA LIMITED, STANDARD AND POOR’S 500 INDEX, MORGAN STANLEY AND COMPANY INCORPORATED, UNITED STATES. FEDERAL RESERVE BOARD, APPLE INCORPORATED

Industry super roars to the lead

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Original article by Joanna Mather
The Australian Financial Review – Page: 1 & 4 : 9-Jan-19

Rice Warner forecasts that industry superannuation funds will hold assets worth $800m in 2020, displacing self-managed super funds as the sector’s largest asset managers. Rice Warner also estimates that industry funds’ assets will top $1bn in 2024 and $1.7trn in 2033. Industry funds will boast a 37 per cent share of the market in 2033, ahead of SMSFs (30 per cent) and retail funds (23 per cent). Industry experts note that employers are becoming more willing to embrace industry funds, while the fallout from the financial services royal commission is expected to accelerate the shift from retail funds to industry funds.

CORPORATES
RICE WARNER ACTUARIES PTY LTD, AUSTRALIA. ROYAL COMMISSION INTO MISCONDUCT IN THE BANKING, SUPERANNUATION AND FINANCIAL SERVICES INDUSTRY, AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY, DELOITTE TOUCHE TOHMATSU LIMITED, INDUSTRY SUPER AUSTRALIA PTY LTD, AMP LIMITED – ASX AMP, AUSTRALIANSUPER PTY LTD, HOST-PLUS, CONSTRUCTION AND BUILDING UNIONS’ SUPERANNUATION FUND, TELSTRA CORPORATION LIMITED – ASX TLS, VANGUARD INVESTMENTS AUSTRALIA LIMITED

Satisfaction with banks remains positive and above the long term average

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Original article by Roy Morgan
Market Research Update – Page: Online : 9-Jan-19

New results from Roy Morgan shows that customer satisfaction with Australia’s banks rose to 78.1% in the six months to November 2018, compared with 78.0% in the six months to October. This represents the first positive monthly move in satisfaction since prior to the start of the Finance Royal Commission in January. Satisfaction with banks remains above the long-term average of 74.3% calculated since 2001 and well up on the 58.7% in January 2001. Of the 10 largest consumer banks, ING with 88.8% satisfaction (up 3.6% points from January) and Bendigo Bank on 88.5% (up 0.1% point), were the only ones to show improvements in satisfaction during the Royal Commission. Westpac showed the biggest decline (down 5.5% points). The CBA retains its position of having the highest satisfaction among the big four with 76.7%, followed by NAB (74.6%), ANZ (74.3%) and Westpac (72.4%). Roy Morgan’s ‘Customer Satisfaction-Consumer Banking in Australia November Report’ is based on in-depth interviews conducted face-to-face with over 50,000 consumers per annum in their homes, including over 4,000 bank customers per month.

CORPORATES
ROY MORGAN LIMITED

Banks in GST war with ATO

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Original article by John Kehoe
The Australian Financial Review – Page: 1 & 2 : 8-Jan-19

The Australian Taxation Office wants to cut the amount of goods and services tax credits that banks and other financial institutions claim for providing home loans, credit cards and transactional accounts. Experts suggest that the ATO’s clampdown could cost each of the big banks between $60 million and $80 million a year, while bank executives acknowledge that it will be very difficult for them to pass on any higher tax costs to customers, given the current poor reputation of the banking sector.

CORPORATES
AUSTRALIAN TAXATION OFFICE, AUSTRALIAN BANKING ASSOCIATION

Challenging year in the offing for ASX listings

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Original article by William McInnes
The Australian Financial Review – Page: 12 & 16 : 8-Jan-19

More than 130 companies debuted on the Australian sharemarket in 2018, but stock exchange operator ASX Limited expects the environment for new listings to be difficult in 2019. Max Cunningham, the ASX’s executive general manager of listings, says the first quarter in particular will be challenging given the recent market volatility, although the outlook for calendar 2019 will become clearer by March or April. He adds that several large technology companies are looking at IPOs, and he notes increased listing activity in the mining sector.

CORPORATES
ASX LIMITED – ASX ASX, COLES GROUP LIMITED – ASX COL, PROPERTY EXCHANGE AUSTRALIA, COLONIAL FIRST STATE GLOBAL ASSET MANAGEMENT, WISETECH GLOBAL LIMITED – ASX WTC, XERO LIMITED – ASX XRO, APPEN LIMITED – ASX APX

Fed will take a break from rate hikes: Yellen

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Original article by Joyce Moullakis
The Australian – Page: 13 & 18 : 8-Jan-19

The Federal Reserve raised US interest four times in 2018, and former chair Janet Yellen says another one or two rate rises may be necessary to prevent the economy from overheating. However, Yellen has told a conference in China that she does not expect the central bank to tighten monetary policy again immediately. Yellen’s successor Jerome Powell has signalled that the Federal Reserve will be flexible in its approach to monetary policy in 2019.

CORPORATES
UNITED STATES. FEDERAL RESERVE BOARD, UNITED STATES. FEDERAL OPEN MARKET COMMITTEE, UBS AG, AMERICAN ECONOMIC ASSOCIATION, PEOPLE’S BANK OF CHINA, EUROPEAN CENTRAL BANK, UNITED STATES. EXECUTIVE OFFICE OF THE PRESIDENT

After all the carnage, it may soon be time to buy

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Original article by David Rogers
The Australian – Page: 18 : 8-Jan-19

The S&P/ASX 200’s recent rally has seen its 12-month forward price-to-earnings ratio return to its long-term average following a sharp sell-down in the December quarter. Meanwhile, the S&P 500 is trading at around eight per cent below its long-term average. The near-term outlook for equities may depend on a range of factors, including trade negotiations between the US and China.

CORPORATES
STANDARD AND POOR’S ASX 200 INDEX, STANDARD AND POOR’S 500 INDEX, UNITED STATES. FEDERAL RESERVE BOARD, NIKKEI 225 INDEX, BANK OF AMERICA CORPORATION, MERRILL LYNCH AND COMPANY INCORPORATED, MSCI ALL COUNTRY WORLD INDEX

UBS, Macquarie top of the dealmaking charts

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Original article by Jonathan Shapiro
The Australian Financial Review – Page: 27 : 4-Jan-19

Data from Dealogic shows that UBS displaced Macquarie as Australia’s highest-earning investment bank in 2018, with revenue of $US219m. It was followed by Macquarie with revenue of $US146m and JP Morgan ($US108m). UBS was also the top revenue-earner in terms of mergers and acquisitions activity, handling some $US752m worth of deals in Australasia. JP Morgan generated the most revenue among investment banks globally, at $US6.9bn.

CORPORATES
DEALOGIC (AUSTRALIA) PTY LTD, UBS HOLDINGS PTY LTD, MACQUARIE GROUP LIMITED – ASX MQG, JP MORGAN AUSTRALIA LIMITED, JP MORGAN AND COMPANY INCORPORATED, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, BANK OF CHINA LIMITED, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, MITSUBISHI UFJ FINANCIAL GROUP INCORPORATED, WESTPAC BANKING CORPORATION – ASX WBC, THE GOLDMAN SACHS GROUP INCORPORATED, MORGAN STANLEY AND COMPANY INCORPORATED, EVERCORE PARTNERS, MOELIS AND COMPANY, CENTERVIEW

Rethink company strikes: Maxsted

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Original article by Eli Greenblat
The Australian – Page: 15 & 16 : 4-Jan-19

The remuneration reports of three major banks attracted large protest votes at AGMs in December, putting them at risk of a board spill in 2019. Westpac chairman Lindsay Maxsted says the threshold for a ‘first strike’ is too low at 25 per cent, arguing that most resolutions put to annual meetings require a minimum vote of 50 per cent. Some 88 per cent of National Australia Bank shareholders voted against its remuneration report, while Westpac’s attracted a ‘no’ vote of 64.2 per cent.

CORPORATES
WESTPAC BANKING CORPORATION – ASX WBC, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, AMP LIMITED – ASX AMP, AUSTRALIAN COUNCIL OF SUPERANNUATION INVESTORS INCORPORATED