BANKS AND BANKING – AUSTRALIA

Report finds ANZ tribal, slow and lazy

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Original article by James Frost
The Australian Financial Review – Page: 12 : 23-Aug-19

ANZ chairman David Gonski has commented on a governance, culture and accountability self-assessment that the bank prepared for the Australian Prudential Regulation Authority. Shortcomings revealed in the document, which Gonski notes was prepared on a confidential basis, prompted APRA to impose a $500 million capital charge on the bank. Gonski says some of these shortcomings include a penchant for seeking short-term fixes and a lack of accountability.

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

Cure for housing fix ‘worse than disease’: UBS

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Original article by Duncan Hughes
The Australian Financial Review – Page: 10 : 23-Aug-19

Investment bank UBS has warned that the Reserve Bank of Australia’s move towards extremely low interest rates risks reflating the residential property ‘bubble’. The ultra-low rates are also putting pressure on the dividend policies and margin levels of the nation’s large banks, while plans by the Australian Prudential Regulation Authority to reduce related-party exposure limits with regard to Tier 1 capital will put pressure on the banks’ capital.

CORPORATES
UBS HOLDINGS PTY LTD, RESERVE BANK OF AUSTRALIA, AUSTRALIA RADIATION LABORATORIES, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ

Bank charges on deposits a possibility

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Original article by Matthew Cranston
The Australian Financial Review – Page: 10 : 23-Aug-19

Data from the Reserve Bank shows that nearly 10 per cent of the deposits held by Australia’s major banks received no interest prior to the official interest rate cut in July, while a similar proportion of deposits earned interest of less than 50 basis points. Swiss Re’s chief economist Jerome Haegeli says Australian banks could potentially begin charging customers to hold their deposits. Several banks in Europe have already announced such a move, while the Bank of New York Mellon did so in 2011.

CORPORATES
RESERVE BANK OF AUSTRALIA, SWISS REINSURANCE COMPANY, THE BANK OF NEW YORK MELLON CORPORATION, UBS AG, JYSKE BANK, 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

Fixed rate falling to new lows under 3pc

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Original article by Cliona O’Dowd
The Australian – Page: 21 : 22-Aug-19

Australia’s residential property market has received a boost in the lead-up to the key selling season, with a number of banks reducing their fixed mortgage interest rates to new lows. Greater Bank has slashed its one-year fixed rate to just 2.79 per cent, while some owner-occupier loans offered by St George and the Bank of Melbourne have been reduced to 2.94 per cent. Sally Tindall of RateCity cautions that fixed home loan interest rates may fall even lower, given that the Reserve Bank may further reduce the cash rate.

CORPORATES
GREATER BANK LIMITED, ST GEORGE BANK LIMITED, BANK OF MELBOURNE LIMITED, BANK OF SOUTH AUSTRALIA LIMITED, RATECITY PTY LTD, RESERVE BANK OF AUSTRALIA, WESTPAC BANKING CORPORATION – ASX WBC, CANSTAR PTY LTD

Where’s the crisis? Westpac skewers talk of quantitative easing

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Original article by Patrick Commins
The Australian Financial Review – Page: 29 : 22-Aug-19

Lyn Cobley, the head of institutional banking at Westpac, says unconventional monetary policy was necessary in response to the global financial crisis. However, she says there is no need for the Reserve Bank to pursue quantitative easing at present, as the Australian economy and the nation’s banking system are "far from crisis". She adds that Westpac’s senior institutional bankers generally agree that further reducing interest rates would have little impact on the borrowing and investment intentions of their clients.

CORPORATES
WESTPAC BANKING CORPORATION – ASX WBC, RESERVE BANK OF AUSTRALIA, EUROPEAN CENTRAL BANK, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA

Banks should explain credit card fine print

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Original article by Tom McIlroy
The Australian Financial Review – Page: 3 : 20-Aug-19

Research involving almost 400,000 Commonwealth Bank of Australia credit card users suggests that there are benefits to be had by being more transparent with customers. Harvard researchers found that CBA customers who were provided with more transparency about their credit cards spent 9.9 per cent more each month, and were much less likely to cancel their accounts. In announcing the results of their study, authors Ryan W. Buell and MoonSoo Choi called for more research into transparency and customer engagement.

CORPORATES
COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, HARVARD UNIVERSITY

Banks rule OK on loan repayments as Westpac beats ASIC

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Original article by Andrew White
The Australian – Page: Online : 14-Aug-19

The Federal Court has dismissed claims by the Australian Securities & Investments Commission that Westpac had breached the responsible lending rules. ASIC’s case against Westpac had been closely observed by lenders, with the responsible lending rules being used by banks to determine a borrower’s ability to repay a loan. In rejecting ASIC’s case against Westpac, Justice Federal Court judge Nye Perram stated Westpac should not be automatically compelled to consider a borrower’s declared living expenses, and should be free to make use of spending benchmarks.

CORPORATES
FEDERAL COURT OF AUSTRALIA, AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION, WESTPAC BANKING CORPORATION – ASX WBC

Cheap money squeezes CBA

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Original article by James Eyers, Jonathan Shapiro
The Australian Financial Review – Page: 1 & 18 : 8-Aug-19

The Commonwealth Bank of Australia has posted a 2018-19 cash profit of $8.49bn, which is 4.7 per cent lower than previously; revenue was two per cent lower at $24.4bn. CEO Matt Comyn has warned that the bank’s net interest margin will fall by four basis points in 2019-20 due to the consecutive official interest rate cuts in June and July. He adds that there will be limited scope to pass on further rate cuts to customers, as many of its deposit rates are already close to zero. CBA’s cost-to-income ratio is currently 46.2 per cent, and Comyn says the aim is to reduce it to below 40 per cent over time.

CORPORATES
COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, RESERVE BANK OF AUSTRALIA, JP MORGAN AUSTRALIA LIMITED, CITIGROUP PTY LTD, PM CAPITAL LIMITED, RESERVE BANK OF NEW ZEALAND

Big four lending at record low as competition bites

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Original article by Duncan Hughes
The Australian Financial Review – Page: 3 : 6-Aug-19

Analysis by Morgan Stanley suggests that smaller Australian banks and non-authorised deposit-taking institutions are enjoying stronger growth in mortgage lending than the nation’s four largest banks. The ‘big four’ are attempting to counter this by offering incentives and aggressively reducing their interest rates, but some of the smaller lenders are matching these offers. Meanwhile, data from Australian Finance Group shows that the market share of non-bank lenders rose to a record 42 per cent in the June quarter.

CORPORATES
MORGAN STANLEY AUSTRALIA LIMITED, AUSTRALIAN FINANCE GROUP LIMITED – ASX AFG, 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, ME BANK, BENDIGO BANK, CANSTAR PTY LTD, THINKTANK, THE BLACKSTONE GROUP LP, LA TROBE FINANCIAL PTY LTD

CBA sets banking tone with profit pressure

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Original article by Cliona O’Dowd
The Australian – Page: 17 & 20 : 5-Aug-19

The consensus of analysts polled by Bloomberg is that the Commonwealth Bank of Australia will post a 2018-19 cash profit of $8.76bn, which would be seven per cent lower than previously. Jonathan Mott of UBS estimates that CBA has about $5bn in excess capital after completing the sale of Colonial First State Global Asset Management. He says that rather than announcing a special dividend, the bank should retain some capital until the outcome of the New Zealand Capital Review is known. Mott recently downgraded his recommendation on CBA’s stock to ‘sell’. AMP and Suncorp are among the other companies that will issue earnings reports in coming days.

CORPORATES
COMMOTION SYSTEMS, BLOOMBERG LP, UBS HOLDINGS PTY LTD, COLONIAL FIRST STATE GLOBAL ASSET MANAGEMENT, AMP LIMITED – ASX AMP, SUNCORP GROUP LIMITED – ASX SUN, INSURANCE AUSTRALIA GROUP LIMITED – ASX IAG, AGL ENERGY LIMITED – ASX AGL, TRANSURBAN GROUP LIMITED – ASX TCL, RECKON LIMITED – ASX RKN, MIRVAC GROUP – ASX MGR, MITSUBISHI UFJ FINANCIAL GROUP INCORPORATED, JP MORGAN AUSTRALIA LIMITED, ORD MINNETT GROUP LIMITED, AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY