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.
So predictable: Quarterly Statement by the Council of Financial Regulators – June 2020 The Council of Financial Regulators (the Council) held its regular quarterly meeting on Friday, 19 June. The Australian Treasurer attended for part of the meeting. The Council has been meeting more frequently over the past several months and will continue to do so
In noted yesterday how Australia was facing a mortgage time bomb given 485,063 mortgages valued at $175.6 billion have been deferred for six month by Australia’s banks, representing around one in fourteen borrowers: I also noted how the expiry of these mortgage deferrals would coincide with the expiry of the Morrison Government’s emergency income support
The Australian Bankers Association (ABA) has updated its loan deferral data to 19 June, which reveals that 779,458 loans have been deferred across Australia, including 485,063 mortgages: In value terms, $236.7 billion of total loans have been deferred, including $175.6 billion of mortgages: According to the ABA, one in fourteen mortgages are currently being deferred
I noted earlier this week how Australia was facing a mortgage repayment cliff in September given 480,700 mortgages have been deferred for six months by Australia’s banks worth $173.5 billion: That equates to around one in 14 mortgage holders, according to the Australian Bankers Association. Now, it’s been revealed that the banks will extend relief
Lordy, COVID-19 is exposing the Kouk as an economist of such throwaway views that he might well claim the earth is flat shortly: Where do you think the $7.0b “to private bank accounts” comes from? It is from the savings in – wait for it – private bank accounts (household savings /super funds / insurance
The Australian Banking Association (ABA) has released data on loan deferrals to 12 June. 772,600 loans have been deferred across Australia, including 480,700 mortgages: In dollar terms, $234.1 billion total loans have been deferred, including $173.5 billion of mortgages: According to the ABA, around one in 14 mortgage holders have had their repayments deferred. The
Via the excellent Damien Boey at Credit Suisse: Loan demand plunges in April. Loan approvals fell sharply by 9.2% in April, taking year-ended growth lower to -2.9% from 12.6%. Compositionally, weakness was broadly based across lending categories, with particularly sharp falls in personal and business construction loans. Worse still, the Australian Bureau of Statistics (ABS)
So says Bloomie: The global shift to value from growth is playing out in Australian shares in force and could help the nation’s benchmark stock index close the gap with regional peers, according to analysts. The recent surge in domestic value stocks is stronger than in the U.S. in part because the major banks have
A strangely put but sensible warning from the Flying Circus today: Investors holding the banks as a safe yield play have had a wake-up call courtesy of COVID-19. NAB has cut its dividend by more than 60 per cent, ANZ and Westpac have deferred their interim dividends and decide in August whether to make a
Via Banking Day: A showdown looms this morning between ME Bank’s board and irate shareholders seeking accountability for the ruinous decision to slash redraw entitlements of thousands of its mortgage borrowers. ME’s board is due to meet for the first time since the bank’s reputation was savaged in the first week of May by customers
Data from Canstar shows that Australian banks reduced the interest rates on a range of savings accounts and term deposits by up to 75 basis points in May, sending them to near zero: Retirees and savers are wearing the costs of a home loan price war… Canstar financial services executive Steve Mickenbecker attributed the race
Via Moody’s: » The 30+ days delinquency rate for prime Australian residential mortgage-backed securities (RMBS) increased to 1.79% in March 2020 from 1.55% in December 2019 and 1.57% in March 2019. » Delinquencies will continue to increase in 2020 because of the economic disruptions caused by the coronavirus outbreak. Australian prime RMBS delinquency rates, which
Via APRA monthly banking numbers for April. Investor mortgages are still in retreat following last year’s major accident: The year on year shrinkage will not make seen again until June when we get twelve months from APRA’s portfolio rejig. But investor mortgages are falling across the big eight banks, and accelerated downwards in April: NAB
Via the excellent Damien Boey at Credit Suisse: Credit growth surprises materially to the downside. Bank credit was unchanged in April, compared with the Consensus forecast for 0.6% monthly growth. Year-ended growth slowed to 3.6% from an upwardly revised 3.7%, versus expectations for a pick up to 4% . Compositionally, business and housing credit rose moderately, while personal credit fell. Arguably the
A Senate committee has been told that businesses and households have now deferred around $250 billion worth of loan repayments due to the coronavirus pandemic. However, Australian Prudential Regulation Authority (APRA) chairman Wayne Byres conceded that some customers will not be able to repay their loans when they are required to resume repayments: Australian Prudential
The Australian dollar is pulling back a little from the overnight surge: Bonds are firm: XJO is holding: Underneath the bonnet, however, there is considerable action. Big Iron is copping it: Big Gas marches on: Big Gold is bashed: But Big Banks have launched as Australia’s virus victory percolates: The financials index has very a
Via Banking Day: Demand for guarantees under the Morrison Government’s First Home Loan Deposit Scheme now exceeds capacity after the limit of 10,000 borrower reservations was reached last week. Data collated by the National Housing Finance and Investment Corporation – the government agency tasked with managing the program – show that 5,500 guarantees have been
What’s our medium to long-term outlook on Australian banks? We are not positive on Australian banks in the medium term. Australian banks will have a time to shine again. That time is not while staring down the barrel of the highest unemployment rate seen since the Great Depression and an extended period of close to
Can anyone say “sovereign risk”: S&P Global Ratings today said it has revised its outlook on Genworth Financial Mortgage Insurance Pty Ltd. (Genworth Australia) and Genworth Financial Mortgage Insurance Pty Ltd. (NZ Branch) to negative from stable. At the same time, we affirmed our ‘A’ insurer financial strength and issuer credit ratings on both entities. We also affirmed the rating on Genworth Australia’s subordinated
The Australian Bankers Association (ABA) has released figures showing that 429,000 mortgages have so far been deferred – one in every 14 mortgages – totaling $153.5 billion: The Australian Banking Association today released new figures which showed 429,000 mortgages had been deferred totalling $153.5 billion. The figures take the total number of loans deferred to
Some numbers for you: 1. Gov’t Guarantee 50% of new loans, up to $40b. Runs from 23 March to 30 Sep; 3. CBA has lent $555m and NAB $370m about a quarter of the way through, and 4. If you assume WBC and ANZ are a little lower than NAB = $1.5b ish so far.
Via the excellent Damien Boey at Credit Suisse: Real yield curve model points to steepening, but … We define the Australian real yield curve as the 10-year inflation-indexed bond yield minus the real 3-month interbank rate, using the inflation swaps curve to profile long- and short-term inflation expectations. Our proprietary model of the real yield curve
Via the excellent Jonathon Mott at UBS: Results were all about the Balance Sheet. P&L takes the back-seat 1H20 reporting season was disappointing, in our view. Although sector NPAT fell 45%, the focus was on capital and provisioning build as the banks prepare for a recession. COVID-19 overlays were at the lower end of expectations,
The ABS is out with the April jobs report: The unemployment rate is a joke, resulting from ABS skullduggery over why less people participated. If the participation rate had been stable the number would have been 9.6%. Everything else is dire.
From Banking Day: Weekly application volumes trended lower over March, April and May “relative to the peak volumes experienced in February,” Commonwealth Bank said in a trading update yesterday. On the other hand the bank said “application volumes remain strong and are around 10 per cent higher than the same period last year,” perhaps confounding
Drip, drip, drip: Fitch Ratings – Sydney/Singapore – 12 May 2020: Fitch Ratings has downgraded the Insurer Financial Strength (IFS) Rating of Genworth Mortgage Insurance Australia Ltd’s (GMA) main operating subsidiary, Genworth Financial Mortgage Insurance Pty Limited (GFMI) to ‘A’ (Strong) from ‘A+’ (Strong). The Outlook is Negative. KEY RATING DRIVERS The rating actions are
Nice pickup from Dan Ziffer from the CBA update: pic.twitter.com/OO8zwi48rs — Dan Ziffer (@danziffer) May 12, 2020 On those numbers CBA would only need $8bn in capital to replenish that which was lost. I find that very hard to believe. It is probably derived from one of the usual garbage-in, garbage-out models.
Via Banking Day: Macquarie Securities has reviewed the institutional loan portfolios of the major banks, using a number of quality screens to assess their strengths: the rate of growth in the lead-up to the downturn; the proportion of listed versus unlisted companies; the proportion of companies with credit ratings; the average credit rating across the
CBA out with its update: So, profits down 23%. It’s sold Colonial First State to KKR. NIM down despite big deposit flows. Provisions up solidly but not enough. Capital not strong at 10.7% but it’s in line with the other banks so I guess that’s why it has been allowed to continue the dividend. That
Via Banking Day: Westpac is about to slam the brakes on home lending after it tightened credit policies to curtail lending to borrowers heavily exposed to the impact of the economic lockdown. The bank on Monday revealed details of the new policy in a notification sent to mortgage brokers. From 17 May Westpac will cease
