BANKS AND BANKING – AUSTRALIA

NAB in turmoil as duo exit

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Original article by Joyce Moullakis, Ben Butler
The Australian – Page: 1 & 4 : 8-Feb-19

Phil Chronican will become acting CEO of National Australia Bank after Andrew Thorburn advised that he will step down on 28 February. Chairman Ken Henry will also step down when a permanent CEO is appointed. Thorburn and Henry in particular had attracted criticism in the financial services royal commission’s final report over their reluctance to accept responsibility for the misconduct that was exposed by the inquiry. Some fund managers expect NAB to choose an external candidate to replace Thorburn, although Mike Baird and Anthony Healy are said to be among the internal contenders.

CORPORATES
NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, AUSTRALIA. ROYAL COMMISSION INTO MISCONDUCT IN THE BANKING, SUPERANNUATION AND FINANCIAL SERVICES INDUSTRY, WESTPAC BANKING CORPORATION – ASX WBC, MEDIBANK PRIVATE LIMITED – ASX MPL, AMP LIMITED – ASX AMP, COMMONWEALTH AGRICULTURAL BUREAU INTERNATIONAL, AUSTRALIAN COUNCIL OF SUPERANNUATION INVESTORS INCORPORATED, THE HUMAN GROUP, AUSTRALIA. DEPT OF THE PRIME MINISTER AND CABINET, RESERVE BANK OF AUSTRALIA

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

Prosecutors told to push the envelope

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Original article by James Frost, Liz Main
The Australian Financial Review – Page: 10 : 6-Feb-19

The fees-for-no-service scandal has cost Australia’s four major banks and wealth manager AMP more than $2bn to date. They may also face prosecution under section 1041G of the Corporations Act, after the final report of the financial services royal commission recommended that ASIC should expand its existing probe into potential breaches of this section to include more companies. This is in addition to a recommendation by commissioner Kenneth Hayne that 24 cases of misconduct should be referred for potential civil or criminal action.

CORPORATES
AUSTRALIA. ROYAL COMMISSION INTO MISCONDUCT IN THE BANKING, SUPERANNUATION AND FINANCIAL SERVICES INDUSTRY, AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION, AMP LIMITED – ASX AMP, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, IOOF HOLDINGS LIMITED – ASX IFL, SUNCORP GROUP LIMITED – ASX SUN, COLONIAL FIRST STATE GROUP LIMITED

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

Satisfaction with banks improving

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Original article by Roy Morgan
Market Research Update – Page: Online : 1-Feb-19

New results from Roy Morgan shows that customer satisfaction with Australia’s banks rose to 78.2% in the six months to December 2018, compared with 78.1% in the six months to November. This in turn was up from 78.0% in October. These two positive months are in contrast to the nine months of declines up to October during the Royal Commission, with satisfaction showing a decline of 3.2% points over this period. 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, only ING (up 4.1% points) and Bendigo Bank (up 0.5% points) have shown increased satisfaction from prior to the commencement of the Royal Commission. The CBA retains its position of having the highest satisfaction among the big four with 77.1%, ahead of NAB (75.0%), ANZ (74.2%) and Westpac (72.0%). Roy Morgan’s ‘Customer Satisfaction-Consumer Banking in Australia’ 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, ING BANK (AUSTRALIA) LIMITED, BENDIGO BANK, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, WESTPAC BANKING CORPORATION – ASX WBC, AUSTRALIA. ROYAL COMMISSION INTO MISCONDUCT IN THE BANKING, SUPERANNUATION AND FINANCIAL SERVICES INDUSTRY

Baird defends NAB interest rate hike

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Original article by Joyce Moullakis
The Australian – Page: 15 & 16 : 25-Jan-19

Sally Tindall of RateCity expects other major banks to increase their mortgage interest rates after National Australia Bank announced a rise in its rates for owner-occupiers and investors. NAB has indicated that a rise in wholesale funding costs was the main driver of the rate hike, but chief customer officer Mike Baird notes that it is the first increase in its standard variable interest rate since March 2017. NAB chose to leave its mortgage rates on hold when other banks lifted theirs in September.

CORPORATES
NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, RATECITY PTY LTD, BANK OF QUEENSLAND LIMITED – ASX BOQ, VIRGIN MONEY (AUSTRALIA) PTY LTD, RESERVE BANK OF AUSTRALIA, AUSTRALIA. ROYAL COMMISSION INTO MISCONDUCT IN THE BANKING, SUPERANNUATION AND FINANCIAL SERVICES INDUSTRY

CBA dividend cut on the cards as sell-offs create an earnings hole

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Original article by Misa Han
The Australian Financial Review – Page: 21 : 22-Jan-19

Richard Wiles of Morgan Stanley suggests that the Commonwealth Bank of Australia may have to reduce its dividend payout ratio following a series of asset sales. CBA exited the life insurance sector in 2018 and secured a deal to sell Colonial First State Global Asset Management. It also proposed to spin-off its wealth management and mortgage broking operations. CBA paid a fully franked full-year dividend of $4.31 per share in fiscal 2018, an increase of $0.02.

CORPORATES
COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, MORGAN STANLEY AUSTRALIA LIMITED, COLONIAL FIRST STATE GLOBAL ASSET MANAGEMENT, COLONIAL FIRST STATE GROUP LIMITED, COUNT FINANCIAL LIMITED, FINANCIAL WISDOM LIMITED, AUSSIE HOME LOANS LIMITED, COUNTPLUS LIMITED – ASX CUP, MORTGAGE CHOICE LIMITED – ASX MOC, SOCIETYONE AUSTRALIA PTY LTD

Banks plan exit from uninvestible Britain

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Original article by Sarah Turner, Hans van Leeuwen, Lisa Murray
The Australian Financial Review – Page: 1 & 10 : 16-Jan-19

The Commonwealth Bank has confirmed that it will establish a subsidiary in Amsterdam in response to continuing uncertainty surrounding Britain’s departure from the European Union. Other Australian banks with a presence in the UK are also looking to set up subsidiaries in other European countries to ensure that they can keep operating in the region. Mark Tinkler of AXA Investment Managers says the UK is largely "uninvestible" until the Brexit uncertainty is resolved. The British parliament will shortly vote on the Brexit deal of Prime Minister Theresa May.

CORPORATES
COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, AXA INVESTMENT MANAGERS PTY LTD, GREAT BRITAIN. OFFICE OF THE PRIME MINISTER, WESTPAC BANKING CORPORATION – ASX WBC, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, ALPHINITY INVESTMENT MANAGEMENT PTY LTD, GRANT SAMUEL FUNDS MANAGEMENT PTY LTD, GERMANY. FEDERAL FINANCIAL SUPERVISORY AUTHORITY (BAFIN), BANK OF ENGLAND. PRUDENTIAL REGULATION AUTHORITY