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.
Via Moody’s: The proportion of Australian residential mortgages that were more than 30 days in arrears (30+ delinquency rate) increased to 1.62% in May 2017, the highest rate in five years. Higher delinquencies raise the risk of mortgage defaults and are therefore credit negative for Australian residential mortgage-backed securities (RMBS). Mortgage delinquencies increased to record
Hoocoodanode? Via Domainfax: Gaping holes in the anti-money laundering systems of Australia’s big banks are being exploited by crime groups to wash up to $5 million in drug cash a day, according to confidential briefings by federal and state policing agencies. New details of police investigations reveal that the big four banks – Westpac, ANZ,
Weeoo, weeoo, weeoo. Lol: I have a “liar loan” – a mortgage based on less than absolutely factual information. I’ve pretty much always had liar loans. And I recently obtained a “liar credit card”. So what? Given readers’ (and therefore the media’s) love of stories that combine housing and doomsday scenarios, investment bank UBS received saturation
From the Mortgage Professionals Australia: Bank’s claims about borrowers’ ‘liar loans’ criticised by industry over methodology and intentions The MFAA and FBAA have harshly criticised a UBS report which claimed 1/3 of mortgage applications were not entirely accurate (which they term ‘liar loans’). The report, which also claimed broker channel loans were more likely to contain inaccurate information, was branded ‘reckless’ by the FBAA because
Via Moody’s: Moody’s Investors Service has downgraded to Baa1 from A3 the insurance financial strength rating (IFSR) of Genworth Financial Mortgage Insurance Pty Limited (Genworth Australia). Today’s rating action on Genworth Australia concludes the review initiated on 19 June 2017, which was part of a wider rating action on Australian financial institutions to reflect Moody’s
Dalian is selling today: Big Iron is up anyway: BHP and RIO are both pushing towards break out lines. RIO is right on it and if it can break through then $72 and $86 beckon: The Big Gas re-rating continues as the disastrous Do-nothing Malcolm attacks AGL instead of the pensioner killers. No end in
Via Moody’s: » Macroeconomic update: We forecast that Australia’s real GDP will grow by around 2.5% for full-year 2017 and 2.7% for 2018. Australia’s GDP is growing at below the 10-year average, but we believe the level of growth is supportive of RMBS performance. However, Australia’s high household debt in combination with record low wage
So you want know what drives the bubble? Make sure you’re sitting down because here it is, cross-posted from the always excellent Jonathon Mott at UBS: Work Undertaken Between 7th of July and 4th of August 2017 UBS Evidence Lab conducted an online survey of 907 Australians who had recently taken out a mortgage to buy
Via Banking Day: There may be a dash for the exits from the rowdy sanctums of the Australian Bankers Association, with more than one bank jostling for first mover advantage and any accolades from a select set of stakeholders for doing so. Banks of different stripes are treating a respectful – or in your face
Via UBS: A UBS survey of 907 Australians who took a mortgage in the past 12 months found that just 67 per cent said their application was completely factual and accurate versus 72 per cent a year ago. By channel, the level fell to 61 vs 68 per cent for brokers and to 75 vs
Dalian is trying repair overnight damage today: Big Iron is down sharply. BHP and RIO failed at largish double tops, at least for now… Big Gas is soft but the pensioner abuse specialists continue their predictable but appalling re-rating: Big Gold is off sharply. I remain a seller short term: Big Sleazy has caught a
From Credit Suisse: The capital impact of reputational loss This research note builds on our previous work on the valuation impact of CBA’s reputational loss (refer further: “Commonwealth Bank – Valuing reputational loss” 28 August 2017) by now looking at the possible capital impacts. The two potential key impacts we see in this regard are:
Dalian is firm today but going nowhere really: AUD is rampaging towards 81 cents: Which is capping Big Iron: And Big Gas: Big Gold is mixed: Big Sleazy is at new lows: Big Spruik is mixed: The ASX is at the brink again of its descending triangle: The rampaging AUD may push it off…
Dalian is trying to rebound: BHP is still nudging breakout: Big Gas continues its re-rating with exporters down and the domestic gougers flying: All I can say to that is, what a pack of bloody idiots we are. Big Gold is powering, working beautifully as portfolio insurance. I’m still a seller here for the short
Dalian still down: Big Iron flat a with BHP pushing hard at break out: Big Gas is weak, except Santos which is re-rating as the government sticks its head in its energy arse: Big Gold is on fire. I’m still a seller into strength on the basis that the DPRK will fade and USD is
Via Macquarie: The party is almost over Past tailwinds to turn to future headwinds The major’s ability to reprice mortgages has provided a significant backdrop to their earnings growth over the past decade. However, as we approach the end of the current repricing cycle we expect banks will need to focus on other avenues to
It’s a go: Australian litigation financier IMF Bentham Ltd said it would fund an open class action lawsuit against Commonwealth Bank of Australia in relation to allegations it oversaw thousands of breaches of anti-money laundering rules. IMF said on Tuesday that it will bankroll the class action on behalf of all CBA shareholders who bought
Via Banking Day: Professor Milind Sathye from the University of Canberra expects Asian regulators and law enforcement agencies to audit the anti-money laundering records of other Australian banks in light of CBA’s failures. “Australian banks that have branch licences throughout Asia are likely to come under greater scrutiny from anti-money laundering agencies to ensure they
Via Chanticleer: The announcement that Rob Whitfield will join the board of the Commonwealth Bank will be cheered by investors. In Whitfield, Catherine Livingstone has brought onto the board a high-profile executive with deep banking experience (given his long career at Westpac) and political nous (given his recent roles as secretary of NSW Treasury and of NSW
Dalian has opened OK: So too Big Iron with BHP and RIO nudging break outs: Big Gas is stable, more than can be said for pensioner energy bills: Big Gold is powering. I’m still a trading seller into this strength. DPRK tensions should fade: Sleaze Bank has opened a trap door: And is rapidly approaching
From Domainfax: The Commonwealth Bank of Australia’s apparent failure to properly monitor transactions for money laundering and possible terrorism funding makes action from American regulators inevitable say financial crime experts. American lawyers have told Thomson Reuters that CBA was already responding to information requests from a number of US agencies with differing mandates and enforcement agendas and
The latest from LF Economics: Over the last two decades, Australia has experienced remarkable conditions in the housing and mortgage markets. The extreme growth in land prices, due in large part to the actions of the nation’s passive and reluctant financial regulators, has now placed the housing market in a precarious situation which is now
Via the AFR: Heritage Bank, the nation’s second largest mutual, will stop offering property investment loans and is restructuring other products amid fears it will blow tough regulatory speed limits on lending growth after recent attractive offers attracted a deluge of borrowers. It follows the decision of CUA, the nation’s largest mutual, to stop writing new loans for property
Dalian is still running: Big Iron is down as it goes ex-div: Big Gas is running too. The two pensioner rorts, STO and ORG, are re-rating I reckon. The market does love a rent-seeker: Big Gold loving it. I’m still a seller here on the basis that the USD fall is (largely) done: Sleaze Bank
Via Macquarie: Following the introduction of APRA’s 30% interest-only cap there has been a material reduction in interest-only flow and assuming current trends continue banks will be well below the cap by the required timeframe (Sep-17). This was achieved by a combination of aggressive repricing, tightening of credit standards and some concessions from the regulator.
