MacroBusiness covers Australian banks from the perspective of their macro-economic role, as political economy actors, as investment propositions and in terms of financial stability and capital adequacy. Australian banks have played a crucial role in inflating the Australian property bubble, exist within an utterly privileged position as “too big to fail” institutions and operate within a deeply distorted financial architecture that has Australian tax payers well and truly on the hook in the event of trouble. MacroBusiness seeks to define this role for investors as well as change it in the name of the Australian national interest.
At Domain: Fuelling the forecast rise in defaults is a reluctance by the non-bank lenders to extend credit. Some have now drawn up “no go” lending zones across Sydney and Melbourne. Allen Walker, a partner at receiver and manager Cor Cordis, said he is anticipating more business will come from loan defaults in the coming
Because one year is a long time in Australian property. Via Banking Day: Westpac is easing restrictions on lending to property investors in an attempt to revive its underperforming mortgage business. The bank yesterday raised the loan to value ratio caps on interest-only mortgages from the previous limit of 80 per cent. Under a revised
Via Banking Day: The Australian Taxation Office can disclose tax debt information to credit reporting agencies, following the passage of a tax bill last week. Under normal circumstances, it is an offence for a taxation officer to disclose protected information that has been acquired by them as a taxation officer. Under the new law, included
Welcome to the future of Aussie banks, via UBS on UQ: ONE LINER NPAT miss on higher Bad Debts. Dividend cut for the second consecutive half. KEY NUMBERS (FY19) FY19: (1) Cash NPAT down 14% to $320m (Cons. $330m); (2) Cash basic EPS down 16% to 80cps (Cons. 81cps); (3) Final 2H dividend 31cps (Cons.
They’re risky, have falling earnings, and are very highly valued at 15x forward. Yet Aussie banks are still bid. Why? A couple of Jonathon Mott charts from UBS tell the tale. It’s called the “dash for trash”: Divy cuts anyone?
Via The Australian: Australian fund managers have sent a strong signal to private equity players about the quality of companies looking to list on the ASX, after Latitude Financial failed to secure enough support for its $3.2bn IPO in what was to be the largest float of the year. The IPO for the non-bank lender
Via S&P: Australian prime home-loan arrears fell in August. That’s according to S&P Global Ratings’ recently published “RMBS Arrears Statistics: Australia.” The Standard & Poor’s Performance Index (SPIN) for Australian prime mortgages declined to 1.41% in August from 1.49% a month earlier. While arrears typically fall at this point in the annual cycle, the magnitude
Treasurer Josh Frydenberg announced Monday an ACCC investigation into the banks not passing on interest rate cuts. I think the investigation will make a nice addition to ACCC’s bookshelf. They can file it next Rudd’s FuelWatch and Grocery Code of Conduct. The biggest question is whether the investigation is designed to be a distraction from
Via Domain: The federal budget has had a $2.3 billion hole punched in it by lower-than-expected company tax collections and Australians eager to get their hands on the first stage of the Morrison government’s personal income tax package. Figures from the Finance Department covering the first two months of the 2019-20 financial year show company
It’s never enough bubble for Joshy Recessionberg: The big four banks will be officially investigated for their repeated failures to pass on the full extent of central bank rate cuts to consumers under a government-launched probe into home-loan gouging. Josh Frydenberg has directed the Australian Competition & Consumer Commission to investigate the pricing of residential
Via the AFR: Shayne Elliott, the chief executive of one of the country’s biggest banks, has called on federal Treasurer Josh Frydenberg to convene a summit to discuss the broader economic implications of zero per cent interest rates and quantitative easing. Mr Elliott, who is the CEO of ANZ Banking Group and chairman of the
Via Martin North: Australian banks are having their toughest time attracting investors, according to new analysis from Copley Fund Research, which monitors flows in funds with $1.2 trillion under management. An exodus by fund managers has left 91% of the 430 funds in Copley’s global analysis with zero exposure to the sector. That’s the lowest take-up on record. On average,
Yesterday ANZ warned: Today there are other warnings, via Banking Day: ANZ Bank is under pressure to cut its final dividend after it revealed another blowout in customer remediation costs. …ANZ yesterday came under fire for not giving precise details on the nature of the recently identified remediation cases or any information on how many
The Australian Bureau of Statistics (ABS) recently released its National Financial Accounts for the June quarter, which revealed a 0.5% quarterly rise in Australian banks’ gross external liabilities (offshore borrowings), but a 0.6% decrease over the year. Bonds (+$8 billion), Loans (+$7 billion) and Other (+$5 billion) drove the quarterly rise in offshore borrowings by
At the AFR: The big four banks last week blamed falling profits from ultra-low interest rates for their decision to not pass on all of the Reserve Bank of Australia’s quarter-percentage-point cash rate cut to home loan customers. The central bank cut the cash rate to a record low 0.75 per cent last week. But
So says The Australian: Small business lending rates have barely fallen and those for credit cards have increased in the wake of three cuts in the official interest rate by the Reserve Bank to help spur economic growth. As the big four banks endure a political backlash for not fully passing on the RBA’s latest
So says The Guardian in an “exclusive”: A heavy campaign of lobbying by Australia’s banks preceded the treasurer, Josh Frydenberg, telling financial regulators not to enforce responsible lending laws “too stringently”, Guardian Australia can reveal. Regulators have been left with whiplash by a sudden change in the tone of government remarks over the past month,
Via Martin North: The latest data released today by DFA is our mortgage stress analysis to the end of September 2019. This is derived from our rolling 52,000 household surveys. Mortgage stress examines the cash flows of households, relative to their mortgage repayments. If there is a deficit, households are in stress, and if there
Via NAB: Ken Henry claw backs anybody? Not happy: UBS’ Jon Mott sums it up nicely: From Credit Crunch to Housing Boom in 4 months! A lot of good news priced in While the pick-up in lending is positive, bank fundamentals are increasingly challenged with ultra-low interest rates. Given the falling BBSW, we expect the
Not a large one. He should still get the boot. But a report today at Banking Day shows why some backtracking may be in order: Around 100,000 Australian home borrowers could be hit with rate increases on owner occupier mortgages after up to A$70 billion worth of home loans were reclassified as investment borrowings by
At Domain: NAB followed CBA by saying it would cut rates for owner-occupiers and investors paying principal and interest by 0.15 percentage points. It will cut rates on interest-only loans for investors by 0.3 percentage points. As we said in our last quarterly report, interest-only loans have been so de-risked that they are now an
It’s all aboard the specufestor train now: In a move that is likely to influence other banks’ pricing, CBA on Tuesday said it would lower rates by 0.13 percentage points for all owner-occupiers and for property investors who are paying principal and interest on their loans. Property investors with interest-only loans will receive the full
Back to the bubble with a bullet, via Banking Day: Westpac has announced that it plans to loosen requirements for mortgage brokers to claim certain upfront commissions. In a move seemingly aimed at recapturing support from mortgage brokers across the country, Westpac said from January next year it will not require brokers to invoice the
Via Ian Verrender at the ABC: Ever paid a hotel bill overseas with an Australian credit card and later been gobsmacked by the fees gouged from your bank account? Perhaps you’ve transferred money offshore to a relative and, after being forced to hand over a large percentage of the total, wondered whether you’d just been
APRA mortgage data for August is out and is all over the place like a mad woman’s piss. Here’s the big eight for investor mortgages: ANZ CBA MQG NAB WBC BOQ BEN SUN Aug-19 87140 155562 17300 113519 184886 12053 13640 12364 Jul-19 87729 155406 16698 114311 185615 12054 13587 12355 Jun-19 76774 133761 12643
There’s nothing in its way now. At the AFR comes Generalissimo Josh Recessionberg: …Treasury estimates that a 10 per cent increase in house prices could result in a corresponding lift to GDP of about half a per cent. With Australia’s annual population growth continuing to be strong at 1.6 per cent and the government’s record
Yesteray Generalissimo ScoMo ordered more mortgages, at the AFR: Scott Morrison says Australia’s banks must not shy away from lending after the Hayne commission as he pushes back against what he calls an “instinctiveness” in society towards responsible lending standards that are too onerous. Speaking to the Australian American Association in New York, the Prime Minister
The fasco-housing complex is running hard today at the AFR: Scott Morrison says Australia’s banks must not shy away from lending after the Hayne commission as he pushes back against what he calls an “instinctiveness” in society towards responsible lending standards that are too onerous. Speaking to the Australian American Association in New York, the
Loan-to-value ratios (LVRs) employed by Australia’s larger non-bank lenders when advancing funds to property developers have fallen from a high of 72% in 2017 to an average of 65%, according to law firm Ashurst. Whereas the major banks have also reduced their exposure to residential apartment developers by more than half over the past three
Always watching, watching watching, never doing: At its meeting on 18 September 2019, the Council of Financial Regulators (the Council) discussed risks facing the Australian financial system, regulatory issues and developments relevant to its members. The main topics discussed included the following: Financing conditions and the housing market. Council members discussed credit conditions and recent developments in
