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 Banking Day: The full year results of Australia’s big four banks show the negative effects of a low interest-rate environment on earnings, as the banks bunker down and brace for the full economic impact of the COVID-19 crisis to hit. This is a common thread running between reports from two major professional services firms:
Fixed-rate loans dominate the UK mortgage market, accounting for around 90% of home loans. By comparison, 70% to 90% of property borrowers in Australia opt for variable interest rates. However, National Australia Bank CEO Ross McEwan believes that the trend toward fixed-rate loans will continue to gather pace and they may soon account for about
Prior to this week’s 0.15% cut to the RBA’s cash rate to a record low 0.10%, the gap between average discount variable mortgage rates and the 3-year fixed mortgage rate had already ballooned to 1.26%: As shown above, the average discount variable mortgage rate was 3.65% in October versus a 3-year fixed mortgage rate of
Via Jonathon Mott at UBS: ONE LINER Solid result. Better revenue. Credit provision build. Dividend in line. KEY NUMBERS (FY20, continuing operations) (1) FY20 Cash NPAT from continuing operations $3,710m (8% below Visible Alpha Cons; 1% below UBSe); (2) Cash Basic EPS continuing 121cps (Cons 132cps, UBSe 123cps); (3) Final dividend 30cps (Cons 28cps, UBSe
With repayments on $133 billion worth of mortgages from 325,000 borrowers still deferred, according to APRA, Australia’s largest bank – CBA – has extended a moratorium on forced sales until September 2021: In an email between CBA and Financial Counselling Australia (FCA) obtained by News Corp, the bank confirmed customers still impacted by the health
Yesterday’s mortgage finance data from the Australian Bureau of Statistics (ABS) was unambiguously strong, driven by owner-occupiers: Total new mortgage commitments (excluding refinancings) rose by 25.5% year-on-year in September, driven by a whopping 33.8% growth in owner-occupier mortgage commitments versus 4.2% growth in investor commitments. As regular readers know, mortgage growth is one of the
The Australian Prudential Regulatory Authority (APRA) on Friday updated its loan deferrals data to September 2020, which revealed that there were still $179 billion loans outstanding as at 30 September, accounting for 6.7% of total loans outstanding by value: The volume of deferred mortgages was $133 billion in September, accounting for 7.4% of total
APRA monthly investor mortgages are out for September and there isn’t much joy here for house prices. The ANZ tearaway cratered, CBA is firm but the other two majors are retrenching for net result of zero growth: Year on year is falling steadily For a “community bank” Bendigo sure looks like a credit cavalier. Still,
Via the AFR: ANZ CEO Shayne Elliott has warned the Reserve Bank that its expected interest rate cuts will further drown the financial system in liquidity, hitting bank profits by squeezing margins but doing next to nothing to stimulate the economy and jobs. Mr Elliott said he wasn’t sure what problem further easing would solve
We have this at Bloomie: Financing options open to Australia’s coal operators dwindled further after another of the country’s largest banks said it would end almost all investment in thermal mines and power stations by 2030. The move by Australia and New Zealand Banking Group Ltd. will add to the increasing difficulty miners face in
Via Jonathon Mott at UBS: ONE LINER Broadly in line excluding ‘large/notable’ items. 35cps div (cons 40cps). CET1 solid beat. KEY NUMBERS (FY20, continuing operations) (1) FY20 Cash NPAT from continuing operations $3,758m (in line with UBSe); (2) Cash Basic EPS continuing 133cps (Cons 136cps, UBSe 133cps); (3) Final dividend 35cps (Cons 39cps, UBSe 40cps).
It’s banking Nirvana!
According to CBA’s internal data, Australian mortgage lending strengthened further in September, up 30% year-on-year: However, average loan sizes are shrinking; albeit are still higher year-over-year: The share of fixed rate lending remained at high levels, driven by fixed rates being lower than variable rates: Lending for renovations continued to grow, likely driven by people
Via Ian Rogers at Banking Day: The corporate watchdog has lost its key (and fairly recently-hired) attack dog with the resignation of Daniel Crennan, the deputy chair of the Australian Securities and Investments Commission. Crennan was the person brought in to chase and nail the corporate crooks down in court. His resignation from his ASIC
For the eighth time in two years, Westpac warns: $816m is new.
According to Roy Morgan Research, Australia’s mortgage stress is running near record lows due to around 400,000 mortgage holders on repayment holidays: New research from Roy Morgan shows an estimated 751,000 mortgage holders (20.2%) were at risk of ‘mortgage stress’ in the three months to August 2020 as Australia navigated its way through the COVID
Via the excellent Jonathon Mott at UBS: What to expect with the 2H20E bank results starting Thursday 29th October The 2H20E reporting season (to September) will be unusual, with the banks operating in a false economy, given: almost half the labour force was on wage subsidies, unemployment benefits or employed by the government; mortgage &
Via Banking Day: Exposure to the healthcare, property and construction sectors in its SME banking division and to Queensland tourist districts in its home lending business account for Bank of Queensland’s high rate of loan deferrals. Last month, when APRA released loan deferral data at the lender level, BOQ had the highest level of deferred
The Australian Bankers Association (ABA) has released new data revealing that the number of Australians that have deferred repayments on bank mortgages has fallen to 270,000 from a peak of around 500,000 in June: In late June the number of loans which had been deferred by Australian homeowners and businesses peaked, with around 500,000 mortgages,
Find Bill Evans below delivering his ringing endorsement of what was clearly an outlier result for Westpac consumer sentiment yesterday: Look at the Westpac versus ANZ result: Both are post-budget. I’m not arguing that the ANZ result is more right. But I’d suggest taking the average of the two is a more sensible approach than
Data from Firstmac shows that there was a sharp rise in the proportion of the non-bank lenders’ customers who chose to make additional mortgage repayments in the September quarter. CFO James Austin says this suggests that consumers are being cautious in the current economic environment and opting to reduce their mortgage rather than spend their
Via Banking Day today: Retail shareholders have accused Commonwealth Bank of attempting to sanitise Tuesday’s virtual AGM amid allegations that online questions submitted to the board by stakeholders were not aired at the meeting. The bank’s virtual AGM ran for only two hours, making it the shortest annual meeting in more than a decade. CBA’s
The Aussie dollar is getting the treatment this morning: Bonds are bid: The ASX bath of blood is parting: It’s not Big Iron: It’s not Big Gas: It’s not Big Gold: It’s all about Big Banks: Which are bubbling up to new, ridiculous multiples: Why? Some hope for the property bubble, I hazard. But, mainly,
Via Domain: There has been intense scrutiny over pay for top banking executives since the damaging revelations of the Hayne royal commission. Last week the Reserve Bank of Australia said the banking regulator would soon resume work on ensuring executive pay was tied to targets that encourage good practice and culture. CBA chief executive Matt Comyn is
Via Banking Day: Deposit interest rates are tending to zero right across the banking industry, and a brazen, stay-in-business pricing decision from Xinja Bank will shock competitors as much as their customers. “We will continue to pay interest only on amounts up to A$150,000 in your Stash account. Any amount above that will not earn
From Westpac: Housing finance approvals came in well above expectations, the total value of new loans surging 12.6% in August to be up over 30% in three months. With the earlier COVID shock to finance approvals actually quite mild in the scheme of things, the total value of loan approvals is, somewhat remarkably, over 9%
Via Banking Day: The recovery for Australia’s banks will be “a drawn-out affair”, and they will struggle to regain pre-COVID earnings metrics even as credit losses recede, according to a new report from S&P Global Ratings. Weak business and consumer sentiment is likely to remain the main impediment to credit growth. “In our base case,
CBA says that it has already reached capacity for first home loan deposit scheme (FHLDS) applications: The Commonwealth Bank has confirmed it is no longer taking applications for the first home loan deposit scheme, which is allowing people to acquire a mortgage with as little as a 5 per cent deposit, saying it has run
The Australian Bureau of Statistics (ABS) has released housing finance data for August, which revealed a massive lift, led by first home buyers. The below chart plots the time series: Total new mortgage commitments (excluding refinancings) surged by 12.6% in August, with owner-occupied mortgages surging 13.6% and investor mortgages rising 9.3%. Year-on-year, total new mortgage
The Australian dollar is weak through the morning: Bonds have eased but not much following the deflationary Depressionberg Unstimulus: ASX likes it for no apparent reason. Unless you employ lots of young people to rort the taxpayer it’s a bust. It looks neutral technically: Big Iron is up. I’m still waiting for more seasonal downside
