BUSINESS FORECASTING – AUSTRALIA

Bank profits feel the heat of increased competition

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Original article by Clancy Yeates
The Australian Financial Review – Page: 17 : 2-Nov-15

Factors such as low interest rates and growing competition are putting downward pressure on the lending margins of Australia’s major banks. Westpac has reported flat net interest margins for fiscal 2015, while the rival "big four" banks reported lower margins. Julie Coates of PricewaterhouseCoopers forecasts that the banks’ margins will fall below the record low of 2.05 per cent recorded in 2008.

CORPORATES
WESTPAC BANKING CORPORATION – ASX WBC, PRICEWATERHOUSECOOPERS AUSTRALIA (INTERNATIONAL) PTY LTD, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, WATERMARK FUNDS MANAGEMENT PTY LTD, BELL POTTER SECURITIES LIMITED, RESERVE BANK OF AUSTRALIA

The winds of change will hit companies

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Original article by Stephen Cauchi
The Age – Page: 27 : 30-Oct-15

Morgan Stanley forecasts that the El Nino weather phenomenon will benefit Australian-listed companies across a range of sectors during the 2015-16 summer. Coca-Cola Amatil, JB Hi-Fi, Harvey Norman, Origin Energy and AGL Energy are among the companies that are tipped to enjoy stronger revenue due to the warmer weather associated with El Nino. Mining companies and insurers are also expected to benefit, but wheat, grain and beef producers in particular are likely to be adversely affected.

CORPORATES
MORGAN STANLEY AUSTRALIA LIMITED, COCA-COLA AMATIL LIMITED – ASX CCL, JB HI-FI LIMITED – ASX JBH, HARVEY NORMAN HOLDINGS LIMITED – ASX HVN, ORIGIN ENERGY LIMITED – ASX ORG, AGL ENERGY LIMITED – ASX AGL, INSURANCE AUSTRALIA GROUP LIMITED – ASX IAG, QBE INSURANCE GROUP LIMITED – ASX QBE, GRAINCORP LIMITED – ASX GNC

Bank ‘power’ to protect $30b profits

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Original article by Shaun Drummond, Patrick Commins, Clancy Yeates, Joyce Moullakis
The Australian Financial Review – Page: 1 & 8 : 26-Oct-15

Some fund managers believe that Australian bank customers rather than shareholders are likely to bear the brunt of complying with new capital requirements. Australian Prudential Regulation Authority chairman Wayne Byres recently suggested that shareholders should expect a slightly lower return as a result of the new requirements. However, all four major banks have now lifted their variable mortgage loan interest rates. Meanwhile, the major banks are poised to post a combined profit in excess of $A30bn for 2014-15.

CORPORATES
AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY, AURORA FUNDS MANAGEMENT LIMITED, WESTPAC BANKING CORPORATION – ASX WBC, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, AUSTRALIA. DEPT OF THE PRIME MINISTER AND CABINET, AUSTRALIA. DEPT OF THE TREASURY, AUSTRALIAN LABOR PARTY, BELL POTTER SECURITIES LIMITED, WATERMARK FUNDS MANAGEMENT PTY LTD, CITIGROUP PTY LTD, CONTANGO ASSET MANAGEMENT LIMITED, ARGO INVESTMENTS LIMITED – ASX ARG, CLYDESDALE BANK PLC, MACQUARIE GROUP LIMITED – ASX MQG, MARTIN CURRIE INVESTMENT MANAGEMENT LIMITED

Wind down Masters, Woolworths told

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Original article by Sue Mitchell
The Australian Financial Review – Page: 26 : 22-Oct-15

The Masters Home Improvement joint venture is expected to post a loss of $A236m in the next year, following a loss of $A245m in fiscal 2015. Deutsche Bank estimates that Woolworths could boost its profits by around five per cent by exiting the Masters venture. It could also make a net cash gain of $A161m, while joint venture partner Lowe’s would make a gain of $A80m. Woolworths has invested $A2.2bn in Masters to date.

CORPORATES
WOOLWORTHS LIMITED – ASX WOW, MASTERS HOME IMPROVEMENT AUSTRALIA PTY LTD, LOWE’S COMPANIES INCORPORATED, DEUTSCHE BANK AG, MORGAN STANLEY AUSTRALIA LIMITED, CITIGROUP PTY LTD

Bank customers tipped to fix their mortgages

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Original article by Clancy Yeates
The Australian Financial Review – Page: 17 : 21-Oct-15

The fall in the two-year swap rate to just 1.9 per cent has prompted some smaller financial institutions to reduce their fixed mortgage interest rates in recent weeks. ME Bank’s John Caelli says the downturn in the swap rate may be due to renewed speculation about the timing of monetary policy changes in Australia and the US. Jessica Darnbrough of Mortgage Choice says more home loan borrowers may opt for a fixed interest rate in the wake of Westpac’s move to lift its variable rates.

CORPORATES
ME BANK, MORTGAGE CHOICE LIMITED – ASX MOC, WESTPAC BANKING CORPORATION – ASX WBC, BANK OF WESTERN AUSTRALIA LIMITED, NEWCASTLE PERMANENT BUILDING SOCIETY LIMITED, HERITAGE BANK LIMITED – ASX HBS, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, RESERVE BANK OF AUSTRALIA, UNITED STATES. FEDERAL RESERVE BOARD

BHP’s London listing under fire

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Original article by Amanda Saunders
The Australian Financial Review – Page: 17 & 22 : 20-Oct-15

Nikko Asset Management’s head of Australian equities, Brad Potter, says it is no longer necessary for BHP Billiton to be listed on both the Australian and UK sharemarkets. He argues that rather than reducing BHP’s cost of capital, the dual listing has in fact increased it. Potter also believes that BHP’s progressive dividend policy is unsustainable. He adds that BHP may reconsider the dual listing if shareholders reject a proposal to make a payment to its London-listed company to finance a dividend for British shareholders.

CORPORATES
BHP BILLITON LIMITED – ASX BHP, NIKKO ASSET MANAGEMENT GROUP, RIO TINTO LIMITED – ASX RIO, ARGO INVESTMENTS LIMITED – ASX ARG, SOUTH32 LIMITED – ASX S32, BRAMBLES LIMITED – ASX BXB, LONDON STOCK EXCHANGE

Total, Petronas on lookout for local bargains

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Original article by Angela Macdonald-Smith
The Australian Financial Review – Page: 15 : 19-Oct-15

France-based Total’s investments in Australia include stakes in the Gladstone and Ichthys LNG projects. Australian MD Petter Undem says Total is interested in acquisitions in the local oil and gas sector, including a desire to become the operator of an LNG project rather than just a minority stakeholder. Malaysia-based Petronas – which also has a stake in the Gladstone project – has indicated that it too is keen to pursue acquisitions in Australia.

CORPORATES
TOTAL SA, TOTAL E&P AUSTRALIA, PETROLIAM NASIONAL BERHAD, SANTOS LIMITED – ASX STO, GLADSTONE LNG PTY LTD, INPEX CORPORATION, ICHTHYS LNG PTY LTD, INTEROIL CORPORATION, CENTRAL PETROLEUM LIMITED – ASX CTP, PROGRESS ENERGY INCORPORATED

Small miners close to default: RBA

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Original article by Geoff Winestock, Angela Macdonald-Smith
The Australian Financial Review – Page: 3 : 19-Oct-15

The Reserve Bank of Australia’s latest Financial Stability Review warns that many smaller resources groups are close to defaulting on debt repayments. The central bank says the number of such companies that are at risk of default has reached its highest level since the global financial crisis. Few junior miners have collapsed in 2015, although the outlook for some is uncertain, and several mining services firms have been placed in administration.

CORPORATES
RESERVE BANK OF AUSTRALIA, MIRABELA NICKEL LIMITED – ASX MBN, ATLAS IRON LIMITED – ASX AGO, EMECO HOLDINGS LIMITED – ASX EHL, TERMITE RESOURCES NL, WESTERN DESERT RESOURCES LIMITED, PLUTON RESOURCES LIMITED – ASX PLV, BANDANNA ENERGY LIMITED – ASX BND, WDS LIMITED – ASX WDS, BIG RIM PTY LTD, SARGENT, HEAVY HAULAGE AUSTRALIA PTY LTD, BHP BILLITON LIMITED – ASX BHP, RIO TINTO LIMITED – ASX RIO

CSL launches $1b share buyback

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Original article by Tim Binsted
The Australian Financial Review – Page: 15 : 16-Oct-15

Australian-listed CSL forecasts that its Seqirus influenza division will post revenue of $US450m and a break-even profit in 2015-16, before making a profit in 2017-18. Seqirus has been established by merging the BioCSL division with the recently acquired flu vaccines arm of Novartis. Meanwhile, CSL will repurchase some $A1bn of its shares over the next year. It will be the group’s ninth buyback in the last decade.

CORPORATES
CSL LIMITED – ASX CSL, BIOCSL, SEQIRUS, NOVARTIS AG, UBS HOLDINGS PTY LTD

Small lenders likely to follow majors up

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Original article by Shaun Drummond
The Australian Financial Review – Page: 17 : 16-Oct-15

Australia’s other three major banks have not yet increased their home loan interest rates in response to Westpac’s move. Bendigo & Adelaide Bank CEO Mike Hirst has indicated that the regional bank may increase its mortgage rates if the other "big three" do so, while Suncorp Bank, CUA and Firstmac may do so as well. Suncorp reduced its interest rates on some home loans on the same day that Westpac announced its rate increase.

CORPORATES
WESTPAC BANKING CORPORATION – ASX WBC, BENDIGO AND ADELAIDE BANK LIMITED – ASX BEN, SUNCORP BANK, SUNCORP GROUP LIMITED – ASX SUN, CREDIT UNION AUSTRALIA LIMITED, FIRSTMAC LIMITED, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA