Australian banks

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.

8

S&P: WA mortgage arrears rip higher for major banks

Via S&P: Australian prime home-loan arrears rose in March, according to a recently published report by S&P Global Ratings. The Standard & Poor’s Performance Index (SPIN) for Australian prime mortgages increased to 1.51% in March from 1.48% a month earlier. Arrears are up by 14 basis points year on year. Across the country, arrears movements

2

RBNZ humiliates APRA

Via Banking Day: ANZ in New Zealand has been rebuked by the Reserve Bank, with the RBNZ on Friday announcing that it “revoked ANZ Bank New Zealand Limited’s accreditation to model its own operational risk capital requirement due to a persistent failure in its controls and attestation process”. ANZ NZ is now required to use

22

FHB guarantees to trash responsible lending push

Via Banking Day: Government attempts to accelerate housing loan applicants into the market could potentially retard or complicate the process through which banks make responsible lending decisions. If the new support scheme leads to fewer borrowers being able to demonstrate consistent savings patterns then lenders might be forced to reject more applications on grounds that

19

ASIC throws darts at the HEM bubble

Via The Australian comes further snippets of ASIC versus Westpac on responsible lending standards yesterday: Jeremy Clarke SC, for ASIC, argued that from 2011 to 2015 Westpac didn’t make an adequate assessment of customers’ ability to repay mortgages when they changed from interest-only to principal and interest. Westpac’s Robert Love, head of credit risk optimisation, admitted

11

Fitch: RMBS investors spooked by housing crash

Via Fitch today: Housing Downturn Fears Escalate:Within the space of a year, falling house prices have risen to be the most serious threat to Australian credit markets, according to Australian fixed-income investors. Fitch Ratings’ 2Q19 survey reveals that 70% of investors rank a domestic housing-market downturn as the top risk to Australian credit markets over

4

Another bank bites the dust

Via Banking Day: Citigroup Pty Ltd, the principal operating entity of the American banking giant in Australia, has reported a slide in full year profit after almost no loan growth and a spike in operating costs. Financial accounts lodged with Australian regulators show that Citigroup recorded a net profit of A$157 million in the 12

6

Pre-nationalisation Genworth booms

Via some very temporary factors, via Banking Day: Australia’s largest direct provider of lender’s mortgage insurance, Genworth, has recorded a sharp turnaround in first quarter profit after crystalizing monster gains on its investment portfolio. Genworth boosted its March quarter profit by A$39 million to $47.8 million as growth in new insurance written also improved during the

5

NAB misses, warns, cuts dividend

Not much fun here: In short: profits missed consensus of 3.2bn big; big divi cut, deeper than expected by those few who did; NIM down sharply; more big remediation charges; impairments up sharply; arrears down for 90-day but I’m not sure overall and, a dour CEO outlook. And NAB has been the last of the

13

ANZ’s mortgage book is sinking

First, ANZ’s mortgage book is literally disappearing, as I noted yesterday vis investor loans: Second, it is sinking below the water much faster than the RBA said that it should: ANZ Banking Group chief executive Shayne Elliott is concerned about a spike in customers struggling to repay their mortgages, warning “stubbornly low” wage growth in

10

Westpac, ANZ warn

Cripes, again, again, again: Fourth warning in the past six months or so. And it is still not over. Then there is ANZ this morning: The headline number is a little better than consensus but on falling loan loss provisions and job losses. That ain’t going to last. And Mr Elliott is hardly upbeat about

1

Bank results to suck

Via Banking Day: Revenue trends among the big banks reporting their half-year results over the coming week will be weak, according to one analyst’s preview of the results. And NAB will cut its dividend. Macquarie Securities expects all three of the banks – ANZ, NAB and Westpac – to report lower net interest income and

7

UBS: NAB to cut dividend, sell it

Via UBS’s excellent Jonathon Mott: NAB announced on Thursday that it will take an additional $749m pre-tax charge for increased provisions related to its customer remediation program, 91% of which is wealth related and the remainder banking…Importantly, NAB is yet to provide for customer refunds related to aligned advisers. NAB has the highest number of

12

NAB joins lending standards crackdown

The last of the major four banks has joined the credit standards crunch, NAB via AFR: …From next Monday it will introduce a debt-to-income ratio to improve understanding of the borrowers’ full financial circumstances by considering existing long- and short-term debt commitments. Total debt may consist of a new loan limit, existing home loans, lines

3

UBS: Avoid banks as NAB warns

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

5

APRA releases new lettuce leaf

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

8

ANZ job cuts to dwarf CBA?

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