Banks

3

ANZ’s Asia minor

From Banking Day today comes this little clangor: How much profit does ANZ earn in Asia under its own steam? Around four per cent. This level of profit from Asia in the year to September 2012 is up more than one percentage point on the profit earned directly from the region in 2011. It is

20

Banks face tough times ahead

By Chris Becker The banking sector is facing tough conditions in the medium term as a variety of macro factors intersect: a declining demographic profile exarcebated by rising unemployment in the medium term, lower private credit growth in the form of disleveraging (that has the potential to fall into outright deleveraging, like business finance), structurally high

3

Analysts debate NAB’s provisions

From Banking Day: Citi Research issued a note in response to the announcement, saying: “We see this as primarily a reflection of ongoing UK economic weakness and shortfalls in collective provisioning relative to peers. It is not a broader sector problem.” Credit Suisse took a similar line, saying: “NAB faces the risk of persistent earnings

17

The BoQ canary chirps for QLD

Followers of my previous blog may remember that I have a bit of a penchant for worrying about the Queensland banking system due to the on-going weakness of the local residential and commercial property markets particularly in key areas where regional banks were very active. The bank that has been at the back of the

11

Kohler’s Panglossian banks

Alan Kohler has an interesting take on Australia’s banks today, both from an investment and national viewpoint. He begins: The banks will be big winners from the Reserve Bank’s decision to buffer the Australian economy from the end of the mining boom and to try to bring down the dollar, by bringing interest rates down

11

Deposit insurance is fighting the last war

It is revealed today in an FOI release that bank regulators have considered imposing fee upon banks for deposit guarantees. From Banking Day: Regulators canvassed a range of scenarios, with the mooted annual fee ranging from two basis points to 23 basis points of insured deposits…One scenario that recurs in the documents is how to achieve

35

RBA tells households to keep saving

The RBA’s FSA is out today. It focusses heavily upon European risks and improvements in Australian bank stability. Though I’m not sure why, given we already had the most secure and well regulated financial system in the world. The whole document would send you quickly to sleep but there is a quite useful breakout box

11

What does your support for the banks buy?

If you’ve ever wondered what your support for the banks (guarantees, surpluses, RMBS purchases, RBA cash for coconuts etc) buys you then here it is in a nice little chart form a Moody’s presentation that goes with its recent stress test of Australian banks (which Deep T. will be critiquing in due course):

12

APRA is pushing up the Australian dollar

Whilst the RBA and politicians dance around addressing the strength of the Australian dollar, crushing many productive sectors of the economy, APRA and Mega Bank use policies that pass massive risk to the taxpayer and inflate the level of the AUD. How so? The traditional and “official” view is that if a financial institution or

14

Westpac: Offshore borrowing too risky

The AFR has really good article today about bank funding. It begins: The favoured euphemism for Australian credit growth is “anaemic”….despite the pressure this puts on bank earnings, it should be good news for the ranks of usually foreign analysts who fly over Australia at 30,000 feet and put out reports about a housing bubble, banks

3

Q2 RMBS arrears mixed

From Moodys: Sydney, August 31, 2012 — The prime 30-plus arrears rate remained steady in the second quarter at 1.66% in June, and unchanged from March. In addition, the rate has not moved much from the same period last year when it was at 1.67%. While the overall index is at 1.66%, considerable variation exists within the market. Historically,

12

Hotshot mortgage brokers head for Playboy Mansion

From Banking Day comes a story you wouldn’t read about: A soiree at the Playboy Mansion in Los Angeles this week for gun brokers affiliated to the Australian Finance Group has become a talking point in the industry. The event also serves to highlight the tension fostered by “sponsorship” by the banks of one of

8

CBA to buy Standard Chartered?

Last night FTAlphaville speculated on a truly remarkable possibility. The cross post is below: As fantasy banking M&A goes — this isn’t such an outlandish idea, we reckon. But see what you think: Following their strong share price performance in 2012, an obvious question arises as to how the Australian major banks can use their

21

Very expensive banks

There is a growing degree of scepticism about the banking sector amongst analysts and it is not surprising. As UBS points out Australian banks’ market capitalisation has now reached US$305bn, for which you could get: US Bancorp; Goldman Sachs; Standard Chartered; Deutsche Bank; and the entire UK domestic banking system. The scepticism can be seen

60

After holes, is it back to houses?

Last week while I was in bed with flu, Commonwealth Bank CEO, Ian Narev, declared that the bank is in favour of a new Wallis Inquiry into the financial system. So long, that is, as it’s focussed on the following, from the AFR: Commonwealth Bank of Australia chief executive Ian Narev has warned that the

3

Moody’s warns on mutuals sector

Adding to the poor Bendigo Bank result today (which Macro Investor subscribers will be enjoying) comes a warning from Moody’s: Sydney, August 20, 2012 — Moody’s Investors Service says that Australia’s mutual financial institutions have strong balance sheets, as reflected in their asset quality and funding profiles, but slower credit growth and strong competition from banks for deposits

27

BIS says Australian banks are too big

David Uren at The Australian this morning picks up on BIS comments about Australia’s enormous banks: The performance of Australia’s banking sector is seen by world investors and our own authorities as one of the great sources of our economic strength since the global financial crisis. However, research by the Bank for International Settlements suggests

11

Fitch stress tests RMBS

From Fitch today: Fitch Ratings-Sydney-15 August 2012: Fitch’s stress tests of Australian residential mortgage-backed securities (RMBS) show the resilience of the ratings even through a severe sustained recession and house price deterioration. “Fitch conducted three scenarios stressing interest rates, unemployment and property price declines as the key drivers of defaults and losses. Concurrent increases in

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Who’s responsible for the risk?

The life of a banking system analyst can be lonely indeed. One tends to both offend and support all various interests at different times. I’ve been accused on MB of being a supporter of both Karl Marx and Ayn Rand whilst being a rent seeker for the non-Mega Bank Australian ADIs. I can honestly say I’m not

11

Megabank or Eurobank?

By Chris Becker With the National Australian Bank (NAB) division of Megabank reporting flat 3Q trading results this morning, via Pragmatic Capitalism comes this interesting chart from Bank of America:  Given the fact that the Euro crisis is never ending (thanks to a lack of political compromise) it’s unlikely that the timing on this one will

2

Bank gloomsters are from Mars

The Australian today offers an interesting debate among some insiders on the underpinnings for a new Wallis Inquiry. It actually turns out to be quite interesting thanks to Adam Creichton who delivers some home truths about moral hazard and inflated asset prices. The others, of course, react like he’s from Mars, which is worth the

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APRA castigates banks on hidden arrears

From the AFR comes heavy-duty confirmation that all is not as it should be in Australian bank arrears: The banking regulator has warned lenders they are not doing enough to accurately report overdue loans in relation to home borrowers who are granted hardship concessions. …Hardship concessions granted by banks when someone is ill or unable to

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Protecting the banks

According to Banking Day: Momentum may be gathering regarding a delay in banking regulation reforms, with a planned inquiry into the financial system by an incoming Coalition government of the means of shepherding through any changes to policies that have already been adopted by the industry regulator, APRA. On Saturday, The Australian newspaper reported talk within the