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.

21

Banks scuttle behind APRA’s investor loan limit

From Banking Day: Commonwealth Bank subsidiary Bankwest has imposed a loan-to-valuation ratio cap of 80 per cent on investor mortgages, as it tightens its lending standards to meet regulatory pressure to limit the growth of investment property lending. Bankwest said in a statement that the change would not affect existing investment mortgage customers or customers

17

RBNZ directly targets Auckland mortgages

More humiliation today for the Reserve Bank of Australia and the Australian Prudential Regulatory Authority as its counterpart in New Zealand does exactly what they should be doing and aren’t, from the RBNZ: New Zealand’s financial system is sound and operating effectively, but faces significant risks, Reserve Bank Governor, Graeme Wheeler, said today when releasing the

10

IMF declares FIRE sector a growth killer

The IMF has come a long way: Financial development increases a country’s resilience and boosts economic growth. It mobilizes savings, promotes information sharing, improves resource allocation, and facilitates diversification and management of risk. It also promotes financial stability to the extent that deep and liquid financial systems with diverse instruments help dampen the impact of

11

Millionaires club profit jumps

  by Chris Becker The fifth pillar in the Australian banking sector, Macquarie Group (MQG) announced its 2nd highest profit result ever (yes, the other one was before the GFC). Here are the juicy details: net profit up 27% to $1.6 billion operating income up 14% to $9.3 billion operating expenses up 12% to $6.8

8

Madometer issues bank sell signal

The Madometer is putting out a contrarian bank sell signal: …Remember that most of the arguments against holding the banks weren’t necessarily attached to any intrinsic worries over earnings. In fact the key case against them was that that the yield play had simply gone too far — that the banks were just too expensive. …in an

30

Ken Henry is too big to fail

From the AFR: Former Federal Treasury secretary Ken Henry says he’s thriving on the cut and thrust of the corporate world and will be “decisive” as the new chairman of National Australia Bank. “You don’t get rewarded for sitting on the fence,” Dr Henry said on Thursday. NAB chairman Michael Chaney, who will step down after

7

IMF: Australian banks need capital and macroprudential

From the IMF’s new Regional Economic Outlook: Asynchronous monetary policies in major advanced economies in response to divergent cyclical conditions have contributed to large and rapid exchange rate realignments. Robust growth and the prospect of higher interest rates in the United States, coupled with the start of quantitative easing in the euro area and further

27

Ken Henry joins the oligarchs

Apparently Ken Henry is to succeed Michael Chaney as NAB chairman at the end of this year. I’m a bit torn by this. On the one hand, Henry is a sensible policy-maker with a strong sense of the public good, and may be well placed to help NAB navigate the very difficult times ahead. On

8

NAB shocks

by Chris Becker The last cab off the rank in the banking oligopoly, National Australia Bank (NAB), which routinely has been the worst performer, has surprised the market this morning on two fronts. First, it announced a $5.5 billion capital raising getting ahead of its peers in terms of shoring up a paper thin capital

19

Time to dump bank stocks?

by Chris Becker  Its hard to predict, especially the future, but there’s a combination of factors out there, embiggened by the RBA’s rate cut debacle yesterday, that suggest the top is in for bank stocks. Let’s count them off. Three of the majors have reported flat profits this week as they struggle to combine record low

2

CBA dud profit smashes banks

by Chris Becker Commonwealth Bank (CBA) is the next cab off the banking ologopoly rank to report some pretty flat but still fat and taxpayer supported profits this morning. Following ANZ’s steady but squeezed result and Westpac shores up its increasing expensive capital with an equity raising, the biggest mortgage holder/pusher in the land offered

10

CBA keeps some rate cut

From the SMH: The Commonwealth Bank is only passing on part of Tuesday’s cut in official rates to home loan customers, but has taken the unusual step of raising some deposit interest rates. The country’s biggest bank on Tuesday said it would lower its standard variable mortgage rates by 0.20 percentage points to 5.45 per cent,

17

Fitch pounces on rate cut, demands MP

Onya Fitch: Fitch Ratings-Sydney-05 May 2015: Fitch Ratings says the Reserve Bank of Australia’s (RBA) recent interest rate cut is likely to lead to a strengthened macro-prudential response from the Australian Prudential Regulatory Authority (APRA) for the Australian banking system, although implementation will probably remain targeted and occur on a bank-by-bank basis. Today’s rate cut

3

ANZ boosts profit but margins squeezed

by Chris Becker ANZ has followed Westpac this morning with its first half profit result which along with a positive Wall Street lead should drag the financials up this morning. The headline and bottom line results look very firm: first-half profit rose 3.4% net profit of $3.51 billion (up from $3.39 billion) cash profit up

2

Westpac money printer breaks as equity runs short

by Chris Becker Is Westpac ringing a bell here for banking stocks a day before the RBA will most likely give the oligopoly another boost? The first half net profit of the country’s second biggest mortgage holder was completely flat, unchanged at $3.6 billion as it reported this morning. Just as flat analysis points to

10

Wake up APRA!

As I pointed out yesterday, most major banks are giving the bird to APRA and its 10% ceiling on investor mortgage growth. Mac Bank today reckons the regulator will act: New figures showed the banks expanded loans for property investments in the year ended March by 10.4 per cent, the highest rate since 2008 and more than the

5

Banks laugh at APRA’s investor loan limits

APRA has released its monthly banking statistics and it’s time they discontinued the series given it is humiliating their so-called macroprudential line in the sand of 10% growth in investor mortgages. Of the biggest six banks, only Bank of Queensland and Commonwealth are below the line and the others are accelerating above it with Macquarie leading

9

APRA can’t act soon enough on bank capital

By Leith van Onselen From Fairfax comes news that the Australian Prudential Regulatory Authority (APRA) will act “sooner rather than later” and lift bank capital requirements: At The Australian Financial Review Banking & Wealth Summit in Sydney on Wednesday morning, Mr Byres said the inquiry chaired by David Murray and reforms being pushed by the

41

Bank’s rorting APRA a “molotov cocktail”

From the AFR: Under guidelines issued by APRA in December, banks are not meant to issue mortgages to borrowers unless stress testing shows they can afford to repay the loans on all their properties if mortgage rates hit 7 per cent. A confidential NAB mortgage calculator obtained by The Australian Financial Reviewshows NAB isn’t applying

6

One banker’s take on gloomy consumers

Here’s the antidote to that Chovanec doomsayer, from Craig James at COMMSEC According to the latest data, Aussie consumers turned gloomy over the past week. There is no major explanation for the change. Data showed that home prices continued to rise. And there weren’t too many reasons for fresh concern about the global economy. But

32

Aussie banks borrow offshore like drunken sailors

By Leith van Onselen The release of the Australian Bureau of Statistics (ABS) National Financial Accounts yesterday revealed a large $33 billion (5%) jump in Australian banks’ gross external liabilities (offshore borrowings) in the December quarter, with borrowings now at all time record levels. This surge in offshore borrowings was driven by increases in One