BANKS AND BANKING – AUSTRALIA

Mortgage price war ‘will hurt dividend’

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Original article by Michael Bennet
The Australian – Page: 23 : 20-Oct-16

Scott Manning of JP Morgan says stricter capital requirements and a rise in the customer churn rate contributed to a decline in the four major banks’ return on equity from mortgages between 2010 and 2015. He adds that the return from banks’ non-mortgage products fell to the same level as their cost of capital during this period. Manning warns that banks’ dividends will be vulnerable if the return on equity from mortgages falls any further, and he argues that banks should be offering tailored mortgage interest rates that reflect each borrower’s risk profile.

CORPORATES
JP MORGAN AUSTRALIA LIMITED, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, WESTPAC BANKING CORPORATION – ASX WBC, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, DIGITAL FINANCE ANALYTICS, BANK OF QUEENSLAND LIMITED – ASX BOQ

Livingstone named CBA chair as Turner departs

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Original article by Richard Gluyas
The Australian – Page: 21 : 13-Oct-16

The Commonwealth Bank has advised that Catherine Livingstone will succeed David Turner as the bank’s chair in early 2017. Livingstone has praised Turner’s contribution as chairman, which he has held since 2010. Brian Johnson of CLSA notes that the bank has outperformed during Turner’s time in the role, but adds that it has underperformed in 2016. He also says Livingstone’s biggest challenge is likely to be finding an eventual successor to CEO Ian Narev.

CORPORATES
COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, CLSA AUSTRALIA PTY LTD, TELSTRA CORPORATION LIMITED – ASX TLS, MACQUARIE GROUP LIMITED – ASX MQG, COCHLEAR LIMITED – ASX COH, WESTPAC BANKING CORPORATION – ASX WBC, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB

Bank culture won’t change overnight: PM

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Original article by Phillip Coorey
The Australian Financial Review – Page: 8 : 6-Oct-16

Prime Minister Malcolm Turnbull says Australian banks require more accountability and transparency. He is confident that requiring the "big four" CEOs to front a parliamentary committee at least once a year will facilitate this, although he concedes that it will take some time for the culture within banks to change. The Federal Government also proposes to create a new tribunal for aggrieved customers to seek restitution, which was backed by Commonwealth Bank CEO Ian Narev and ANZ Bank CEO Shayne Elliott when they fronted the committee.

CORPORATES
AUSTRALIA. DEPT OF THE PRIME MINISTER AND CABINET, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, LIBERAL PARTY OF AUSTRALIA, TIMBERCORP LIMITED

Wrinkles in CBA’s satisfaction crown

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Original article by Vesna Poljak
The Australian Financial Review – Page: 23 : 6-Oct-16

Roy Morgan Research’s latest survey of customer bank satisfaction shows that the Commonwealth Bank of Australia (CBA) ranked first in retail main financial institution customer satisfaction for the six months to August 2016. Customers were less satisfied with CBA’s mortgage products, with CBA ranking third out of the big four banks. CBA dominates Australia’s mortgage market, with a 25.3 per cent market share.

CORPORATES
COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, WESTPAC BANKING CORPORATION – ASX WBC, ROY MORGAN RESEARCH LIMITED, AUSTRALIAN LABOR PARTY

Regulating profits ‘dangerous’

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Original article by James Eyers, Joanna Mather
The Australian Financial Review – Page: 1 & 8 : 5-Oct-16

Commonwealth Bank CEO Ian Narev fronted a parliamentary committee on 4 October 2016, where he responded to questions on issues such as profits, interest rates and the bank’s insurance and financial planning scandals. Narev cautioned against any move to regulate the profits of the banking sector, stressing that banks need healthy profits to ensure that they can ride out economic shocks. The CEOs of the other major banks will appear before the committee in coming days. The Australian Labor Party continues to argue the case for a royal commission into the banking sector.

CORPORATES
COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, AUSTRALIA. HOUSE OF REPRESENTATIVES STANDING COMMITTEE ON ECONOMICS, FINANCE AND PUBLIC ADMINISTRATION, AUSTRALIAN LABOR PARTY, WESTPAC BANKING CORPORATION – ASX WBC, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, COMMONWEALTH FINANCIAL PLANNING LIMITED, COMMINSURE, AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION, LIBERAL PARTY OF AUSTRALIA, AUSTRALIA. DEPT OF THE PRIME MINISTER AND CABINET, RESERVE BANK OF AUSTRALIA

Banks get short shrift from investors

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Original article by Chris Kohler
The Australian – Page: 20 : 4-Oct-16

Australian banks continued to be targeted by short sellers in September 2016. Data from Deutsche Bank shows that the ANZ Bank and Westpac are the most popular among short sellers, with short positions accounting for 1.9 per cent of their issued stock, compared with 1.5 per cent for the Commonwealth Bank and one per cent for National Australia Bank. Meanwhile, Credit Suisse recently suggested that the major banks’ elevated dividend yields may eventually face downward pressure.

CORPORATES
DEUTSCHE BANK AG, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, WESTPAC BANKING CORPORATION – ASX WBC, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, CREDIT SUISSE (AUSTRALIA) LIMITED, BENDIGO AND ADELAIDE BANK LIMITED – ASX BEN, BANK OF QUEENSLAND LIMITED – ASX BOQ, AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY, STANDARD AND POOR’S ASX 200 INDEX

‘Most obvious bubble on planet’

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Original article by Geoff Winestock, Su-Lin Tan
The Australian Financial Review – Page: 12 : 30-Sep-16

The Reserve Bank of New Zealand has warned about a correction in property prices. A sharp fall in prices is likely to occur because of a high level of household debt, at 163 per cent of disposable income, and an excessive exposure of NZ banks to housing. Mortgage loans constitute around 55 per cent of the banks’ total assets. In Australia, the household debt exceeds 180 per cent of disposable income and mortgages make up 62 per cent of the banks’ assets.

CORPORATES
RESERVE BANK OF NEW ZEALAND, RESERVE BANK OF AUSTRALIA, MARKET ECONOMICS PTY LTD

ASIC slaps ex-Deutsche trader with lifetime ban for $50m fraud

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Original article by Sally Rose
The Australian Financial Review – Page: 13 : 30-Sep-16

The Australian Securities & Investments Commission (ASIC) has imposed a lifetime ban on providing financial services on former Deutsche Bank trader Andrew Donaldson. ASIC found that Donaldson made "false entries" in order to cover his losses in 2013 and 2014. He was at that time employed as a foreign exchange options and futures trader at the bank.

CORPORATES
AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION, DEUTSCHE BANK AG, ABBEY LIFE, UNITED STATES. DEPT OF JUSTICE

NAB pays out $6.5m for poor advice

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Original article by Michael Roddan
The Australian – Page: 23 : 29-Sep-16

National Australia Bank has revealed that it paid $A6.5 million in compensation to customers who received poor financial advice over the past 18 months. NAB’s head of consumer banking and wealth management, Andrew Hagger, said a significant investment had been made in the bank’s complaints resolution system. The Commonwealth Bank has stated that a third of its compensation scheme was completed in June 2016.

CORPORATES
NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, WESTPAC BANKING CORPORATION – ASX WBC, AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION

Labor says bank profits are too high

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Original article by Joanna Mather, Jonathan Shapiro
The Australian Financial Review – Page: 1 & 2 : 27-Sep-16

The profits of Australia’s four major banks will come under scrutiny when their CEOs front a parliamentary committee in early October 2016. Pat Conroy, an Australian Labor Party member of the committee, will seek an explanation for the banks’ high return on equity compared with their international peers. He notes that there has not been an influx of foreign banks despite the local industry’s high level of profitability. Labor and the Greens favour a royal commission into the banking sector.

CORPORATES
AUSTRALIAN LABOR PARTY, AUSTRALIAN GREENS, AUSTRALIA. DEPT OF THE PRIME MINISTER AND CABINET, AUSTRALIA. HOUSE OF REPRESENTATIVES STANDING COMMITTEE ON ECONOMICS, FINANCE AND PUBLIC ADMINISTRATION, RESERVE BANK OF AUSTRALIA, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, WESTPAC BANKING CORPORATION – ASX WBC, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ