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.
Another bank profit warning: UBS remains highly skeptical: …underlying trends are likely to remain very soft and deteriorating: (1) Volume growth should continue to slow as the credit squeeze continues and banks move to improve expense verification (reduced reliance on the HEM benchmark). (2) A bounce in NIM is expected following mortgage repricing. But how
Via Martin North: The Australian Prudential Regulation Authority (APRA) has released details on the future role and use of enforcement activities in achieving its prudential objectives. Guiding principals include “risk-based”, “forward-looking”, “outcomes-based” and deterrence impact. Of course the question is, will it really make any difference? Here is the release. APRA’s new Enforcement Approach, published today, sets
Bit dodgy this: In the next three years ANZ CEO Shayne Elliott will get rid of another 8000 of the bank’s employees — almost a quarter of the big four’s workforce. …When Elliott took over the Melbourne-headquartered bank in January 2016 its total workforce was just over 50,000, according to its annual report. As of
CLSA’s excellent Brian Johnston is on the money here: Veteran CLSA bank analyst Brian Johnson said while funding costs had fallen, margins were still under pressure due to increased costs as investors coming to the end of their interest-only periods are forced to switch mortgage products to pay off both the principal and interest. Switching
Via The Australian comes CBAmageddon: There is an army of shadowy McKinsey consultants working on Matt Comyn’s hitherto secret plan to cut in the order of $2 billion of costs out of Commonwealth Bank. …While understandably reluctant to publicise their dramatic plans to slash staff numbers, the toe-cutting is already under way. A range of
Via Lindsay David: Hilarious. In the US they measure LVR as cash deposit v property value of the individual asset. In Oz we use the Combined loan to value ratio measuring equity across an entire portfolio. RBA is really making big efforts to make things look nowhere near as bad as they are. pic.twitter.com/cLm57yzFZE —
Via The Australian: Margin Call understands internal work on the project at the bank — which last year made a net profit of $9.23bn — has been underway for some time, with the closure of up to 300 of the bank’s national network of almost 1000 branches said to be under consideration. A reduction of
Via the AFR’s Patrick Commins: The RBA still has the potential to cut rates further, but by this stage that just looks like a case of indulging in “the hair of the dog that bit you”. I would argue a more effective and targeted way to support the housing market right now would be to
Via The Australian: Commonwealth Bank boss Matt Comyn is believed to be working on a plan to cut more than 10,000 employees, about $2 billion of costs, at Australia’s biggest and most profitable bank. No wonder Comyn wants to keep the plan secret — at least until after the May 18 election. Margin Call has
The AUD is a little soft this morning: The lunatic RBA has paralysed bonds for now: XJO is down moderately: Dalian is soft: And Big Iron: Big Gas is still enjoying its deluded political risk holiday: Big Gold is mixed: Big Banks are sick: Made that way by the croaking BOQ canary which has broken
Via the AFR: The former corporate regulator Greg Medcraft has broken his silence on the Hayne royal commission, warning that using the courts against the banks could backfire given justice moves so slowl. He also described the recommendation to kill broker commissions as “absolute rubbish” because it overlooked the crucial role competition plays curbing misconduct.
Yuk: In short: lending down; NIM down; costs up; impairments up; profits down; dividend cut, and no relief in sight. This is not only a bank that needs to hike mortgage rates fast, it is a bank that needs rate cuts to absorb them just as fast. If this is a harbinger for broader banks
New Zealand may not have had a royal commission but it knows what it is doing when it comes to reckless Aussie banks. Via the excellent Jonathon Mott at UBS: Reserve Bank of New Zealand capital requirements larger than prior estimates Recent speeches and publications by the RBNZ suggest it remains fully committed to its Bank
Via S&P: Australian prime home-loan arrears rose in January, according to a recently published report by S&P Global Ratings. The Standard & Poor’s Performance Index (SPIN) for Australian prime mortgages rose to 1.45% in January from 1.38% a month earlier. January is typically the peak of the arrears cycle, reflecting the after-effects of Christmas and
Via the AFR today: As Credit Suisse analysts pointed out recently, investors are genuine net new buyers and invest for capital gains rather than net rental yield. The Labor policies are seen as negative for the investment housing market and sales will slow, leaving residential developers such as Mirvac and Stockland most exposed. On the upside,
Via the AFR: Analysis by The Australian Financial Review shows growth in bank loans of between $100,000 and $500,000 has been negative for the last three quarters, with growth in that loan segment down 0.5 per cent in the December quarter – the worst rate of annual growth for seven years. Falling house prices, which
Via Banking Day: Aggrieved financial services consumers might have to wait several years before regulators are adequately resourced to mount court actions against misbehaving and negligent institutions. While community expectations are high that ASIC will launch a wave of civil and criminal actions against financial institutions over the next 12 months, the truth is that
APRA’s monthly banking statistics have nothing but bad news for house price. Here are the year on year growth rates in investor mortgages in the big eight banks: ANZ CBA MQG NAB WBC BOQ BEN SUN Total Feb-19 -4.5 0.0 43.2 0.6 0.4 0.2 7.3 -1.3 0.4 Jan-19 -4.2 -0.1 44.4 0.7 0.9 0.8 7.0
From Chanticleer trailing bank executives in Hong Kong: The message from the bank executives was clear: housing isn’t a disaster area, and we are certainly open for business. …macro-prudential measures introduced three or four years ago have flowed through the industry – and trimmed 10 per cent to 15 per cent off the maximum a
After Chris Joye’s big short post yesterday, some readers wanted to know more about how to short Aussie house prices. There are a number of ways but note that this not investment advice. The most obvious methods are to do what the MB Fund is doing. Get long government bonds and short the Australian dollar.
Via Livewiremarkets: In assessing whether to get long or short residential mortgage-backed securities (RMBS), we undertake a great deal of quantitative analysis, including revaluing the homes that protect these bonds at regular intervals and developing globally unique RMBS default and prepayment indices. (Regular readers will know that we exited most of our RMBS in February
By Leith van Onselen Judo Capital founder Joseph Healy has told a banking and wealth summit that a generation of bankers lack sufficient knowledge of the lending requirements of the small business sector, as they favour lending to property buyers. From The AFR: The co-founder of challenger SME lender Judo Capital said bankers were addicted
MB has had an on again, off again affair with David Murray. As the big four CEO he led the development of Australia’s external funding imbalance and house price bubble. But as policy maker he did a good job of helping rectify the very same problems. But today we must part ways again, via Banking
Via the AFR comes the chutzpah of the roving cavaliers of credit: ANZ Banking Group chief executive Shayne Elliott has rebuffed Australian Securities and Investments Commission chief prosecutor Dan Crennan’s ambitions to lock bankers in jail, arguing regulators should prioritise a “fully functioning financial system” to support the economy. Mr Elliott warned the corporate regulator’s
Via The Advocate: In a clear stance on Labor’s trail position, Chris Bowen MP has said that the government’s response to the banking royal commission has “got it wrong”, particularly in regard to its “backflip” on removing trail from next year. Speaking at the AFR Banking & Wealth Summit this morning (26 March), Chris Bowen,
Via UBS’ excellent Jonathon Mott: WBC is finding it very difficult to estimate the potential remediation requirements for customers served via aligned planners, especially as many planners no longer work under BTFG Licences and in many cases have left the industry. WBC indicated that it generated fees of $966m from this channel in the decade
It’s been running for a few years: the widening spread between the cash rate and bank funding costs expressed through BBSW. This has led to impaired monetary transmission for the RBA as banks are forced to wither hike rates out of cycle, or not cut when it does. Recent weeks have seen the spread compress
Push it, mate. Push it! No pain, no gain! No more from NAB: In a statement issued yesterday the bank said it will end its ‘Introducer’ payments program, effective October 1 this year. “This means NAB will no longer make referral payments to introducers,“ the bank said. These fees are paid to groups in particular
By Leith van Onselen Analysts at Deutsche bank believe they have found a major flaw in APRA’s mortgage data, which significantly understates average loan size. Basically, because APRA has failed to adjust for split-loans, the $276,000 average loan size figure has been understated by around 40%, according to Deutsche, thus giving regulators a false sense
Lol, the LNP is so corrupt it is difficult to know where to look. Via Banking Day: Which would you prefer? Bill Shorten’s town hall tour of Australia to wrap up the Hayne royal commission into banking? Or policy making of the kind dished up by Josh Frydenberg on Friday? The government has decided not
