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The Banks
Does It Get Any Better For The Big Four?
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early birds
post Posted: Jun 10 2021, 09:02 AM
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https://www.sharecafe.com.au/2021/06/09/a-b...ok-for-banking/

A Brighter Outlook for Banking

Australian Equities Growth Head of Research at First Sentier Investors, Christian Guerra, looks at the developing macroeconomic conditions and what this means for the banks – and dividends.

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i'm bit biased on banks as i'm holding large stake in WBC. I had similar reason to this link , that is why i lean to bullish on aussie banks!!



 
early birds
post Posted: Jun 8 2021, 09:27 AM
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The financial crimes watchdog AUSTRAC has launched an unprecedented series of probes into the record-keeping and internal surveillance processes of major casino groups Crown, Star City and The Star, as well as possible non-compliance at the National Australia Bank.

Monday saw separate announcements from each of the four companies revealing the AUSTRAC interest in their affairs in the sensitive areas of money laundering and anti-terrorism financing.

Like SkyCity, The Star said AUSTRAC’s concerns were identified in the course of a compliance assessment commenced in September 2019.

AUSTRAC also widened its investigation into Crown Resorts after uncovering potential breaches of anti-money laundering laws at its Perth resorts and it is looking deeper into NAB’s anti-money laundering and anti-terrorist financing performance.

AUSTRAC revealed in October last year it was formally investigating Crown over “non-compliance with anti-money laundering laws at its flagship Melbourne casino relating to the due diligence it conducted on high-roller patrons.

Crown said on Monday that AUSTRAC had now also identified “potential serious non-compliance” with anti-money laundering laws at its smaller Perth casino.

Problems at the Perth casino (the old Burswood casino) came to light in the Bergin inquiry in NSW in relation to alleged breaches of rules and regulations ahead of Crown’s attempts to open its Barangaroo casino in Sydney.

“As a result, AUSTRAC has initiated a formal enforcement investigation into the compliance of Crown Perth,” Crown said in a statement released to the ASX on Monday.

In a further update on Monday, Crown also said on Monday it had recently received legal advice that Crown Melbourne had breached Victoria’s Casino Control Act between 2012 and 2016 by taking debit and credit card payments from international hotel guests for casino chips, which is banned under state law.

Crown took over $160 million in payments in this manner until it ceased the practice in 2016, it said.

“Crown is continuing its investigations into these matters, including whether it may have breached other laws by reason of the hotel card process,” it said.

Crown said it had notified the Victorian gambling regulator about the breach as well the royal commissions that are under way in Victoria and Western Australia into its suitability to hold a casino licence.

The Bergin inquiry in NSW ruled in February that Crown was unfit to have a licence for its Barangaroo casino.

And the Victoria Royal Commission was told on Monday that Crown Resorts had potentially underpaid the Victorian government by $167 million in deducting marketing expenses from its calculations of gaming taxes from its poker machine revenue.

Victoria’s royal commission into Crown heard on Monday morning that four days after the inquiry was announced, on February 26, the casino giant prepared a spreadsheet calculating “potential gaming tax underpayments”.

Fairfax Media reported that Crown’s executive general manager of gaming machines, Mark Mackay, told the commission that Crown Melbourne CEO Xavier Walsh had asked him and other senior staff to calculate how much Crown had saved between 2014 and 2019 by deducting the cost of running its loyalty scheme from poker machine tax payments.

Counsel assisting the inquiry, Geoffrey Kozminsky, said the total savings for the period clocked in at $167 million after the deduction of costs such as free valet parking, accommodation and hospitality, according to Fairfax.

Mr Mackay also said Crown believed it was entitled to make the deductions, but he agreed the work had been in response to concerns about “ambiguity” in the gaming tax legislation relating to “jackpot” payouts on the casino’s 2628 poker machines.

And in a 4th statement to the ASX on Monday morning, Crown’s main rival, Sydney-based Star Entertainment said on Monday that AUSTRAC had also identified a potential breach of its anti-money laundering obligations relating to due diligence of “high risk and politically exposed” gamblers at its Sydney casino.

The Star said AUSTRAC had not made a decision about whether or not it will take enforcement action, which could lead to fines, and had requested documents from The Star as part of an enforcement investigation.

Fellow ASX-listed casino, the NZ based SkyCity said on Monday that AUSTRAC had also launched an enforcement investigation into a potential failure to conduct proper due diligence on high-risk and politically exposed patrons at its Adelaide casino.

That is now in the hands of AUSTRAC investigators and prosecutors.

Meanwhile the National Australia Bank’s announcement was not in any way connected to the AUSTRAC references from the casino groups.

In its letter, NAB told the ASX that AUSTRAC had advised the bank in a letter dated June, 4 this year that it is AUSTRAC’s view that there is “potential serious and ongoing non-compliance” with customer identification procedures, ongoing customer due diligence and compliance with Part A of NAB’s AML/CTF Program.

“These concerns have been referred to AUSTRAC’s enforcement team, which has initiated a formal enforcement investigation,“ NAB said.

In the letter to NAB, AUSTRAC said that it has not made any decision about whether or not enforcement action would be taken.

AUSTRAC told the NAB that at this stage, it is not considering civil penalty proceedings and that this decision is “reflective of the work undertaken” by NAB to date.

AUSTRAC’s referral to its enforcement team follows regular engagement by NAB with AUSTRAC over a long period of time, both to report issues and keep AUSTRAC informed of progress in uplifting and strengthening the Group’s AML/CTF Program.

NAB said disclosed the existence of AML/CTF compliance issues in various public disclosures since 2017, including most recently in NAB’s 2021 Half Year Financial Report

AUSTRAC has a wide range of enforcement options available to it, including civil penalty orders, enforceable undertakings, infringement notices and remedial directions.

NAB CEO Ross McEwan said in Monday’s statement that the bank would continue to cooperate with AUSTRAC in its investigations.

AUSTRAC has previously brought actions against the Commonwealth Bank and Westpac and obtained substantial fines ($1.3 billion for Westpac and $700 million from the Commonwealth) in agreed settlements of the two actions.

The shares of the quartet all fell in the wake of the news – NAB shares eased 3.1% to $26.64, Crown shares lost 1.5% to $12.50, Star shares lost 2% to $3.89 and SkyCity shares slumped 6.5% to $A3.18.

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from our own sharecafe

 
early birds
post Posted: May 23 2021, 03:38 PM
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In Reply To: nipper's post @ May 23 2021, 10:16 AM

five weeks remain until the end of the TFF on 30 June 2021. Will fixed rate loan rates begin to rise as banks return to bond markets for term debt?

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that is when we expecting property market to "cooling off" some what do we???

rental market is really soft, and units gonna feel the heat when the time comes i guess!! imho



 
nipper
post Posted: May 23 2021, 10:16 AM
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From Firstlinks.

There are no better examples of Australia's recovery from the pandemic than the fortunes of our major banks and the changing forecasts of our leading economists. For example, in May 2020, NAB reduced its dividend and undertook a Share Purchase Plan (SPP) at $14.15 to build up its capital:

"..... in light of the uncertain economic outlook due to the COVID-19 pandemic. These actions are intended to provide NAB with sufficient capacity to continue supporting our customers through the challenging times ahead, as well as increasing NAB’s capital level to assist with managing through a range of possible scenarios, including a prolonged and severe economic downturn.

If you look back on the last year and feel bad about selling or not buying in March or April 2020 for your own portfolio, then consider where NAB 'sold' (that is, raised capital).


In hindsight, it is easy to be critical and overlook that the outlook was bleak, and no doubt APRA was on the phone, but banking is so good now that NAB is contemplating a share buyback. There is no finance textbook advising companies should issue at $14.15 and buy back at $26 within a year. NAB CEO Ross McEwan was showing a touch of remorse when he said this week:
QUOTE
At the time I said we wanted to be a very safe bank, that's the positioning I took. If I got it wrong, well I'm happy to be in a very strong position now going forward for customers and shareholders.


Don't worry, Ross, it's unlikely to affect your bonus although you did get it wrong, like many of us. Good to know you're happy after you increased the size of the SPP from its original target of $500 million to $1.25 billion during the offer period.

NAB was far from alone in its dire expectation. Check the changing forecasts of Westpac from May 2020 (when it took a $1.8 billion provision against expected Covid-19 losses) to the latest for March 2021. A year ago, Westpac was expecting a 22% fall in residential property prices over 2020 and 2021 and a 2020 fall in GDP of 5%. Now it sees residential property rising 20% over two years and GDP growth of 4% in 2021.


The banks are also enjoying access to the Term Funding Facility, where the RBA lends to them at 0.1% for three years. An additional $4.4 billion was drawn last week taking total outstandings to $104 billion. However, the banks are so liquid from retail deposits that they have not taken up the $200 billion on offer and only five weeks remain until the end of the TFF on 30 June 2021. Will fixed rate loan rates begin to rise as banks return to bond markets for term debt?



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"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne
 
early birds
post Posted: May 17 2021, 09:53 PM
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https://www.afr.com/companies/financial-ser...20210517-p57sji

CBA eats Westpac’s business lunch

“We were probably a little bit conservative on our credit settings in the last 12 months and we’ve reversed that,” he said in an analyst call to discuss the results.

Westpac’s chief financial officer, Michael Rowland, said business lending fell in the six months to March “due to modest demand across most sectors with larger declines in property, agri and professional services”.

“In business lending, we have lagged in the past, but we are starting to apply the same rigour we have brought to mortgages,” Rowland told analysts.

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smell the fight---- will it be a cat fight or something more .....??? unsure.gif



 
nipper
post Posted: May 14 2021, 03:11 PM
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In Reply To: early birds's post @ May 14 2021, 02:47 PM

but that is going to bring out the yip yaps about banks being bastards (how dare they raise rates, maintain a margin , make a profit)

There will be a modest increase in bank funding costs after the RBA's term funding facility expires in June (which could be the perfect tonic to help cool the heated housing market ahead of bigger increases later on ).

QUOTE
In conjunction with the RBA's three-year yield target of 0.1 per cent, the RBA's term funding facility (which allows banks to borrow north of $180 billion for three years at an incredibly low annual cost of 0.1 per cent) has been the key driver of the record low three- to five-year fixed home loan rates. Whereas fixed-rate mortgages used to account for only about 15 per cent of all new home loans, that has leapt to about 40 per cent since the pandemic.

[Commentators] have forecast for some time that fixed rate home loan costs would have to start climbing, and the banks have obliged with many recently lifting these rates by 0.2 percentage points or more.
This will help normalise the banks' cost of funding back to pre-coronavirus levels, which will give them an incentive to push borrowing rates back up.

It could be a very elegant solution to the risk of excessive ebullience emerging in the housing market, which should nevertheless remain robust for years to come. Nobody should be fretting about a 50 to 100 basis point increase in the cheapest fixed-rate mortgage rates in history, which are almost 200 basis points below their January 2019 levels....

Once the term funding facility expires in June, projections are for a big increase in traditional wholesale debt issuance by Aussie banks, which should be between $150 billion and $350 billion over the next few years (something they have held off doing because of the term funding facility).



To me, the fun times will be 2024, when the TFF will be but a distant memory, and the yield curve restored to a more natural shape. Of course, markets be forward looking, yields will be a-building prior to that time.



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"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne

Said 'Thanks' for this post: early birds  
 


early birds
post Posted: May 14 2021, 02:47 PM
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In Reply To: nipper's post @ May 14 2021, 01:41 PM

MY THOUGHTS ONLY

now we have another little property boom, witch is good for banks.

if economy is too hot they start to raise rate----then yield curve gonna go a lot steepen than now---we all know steepen yield curve is really good for bank's profits



 
nipper
post Posted: May 14 2021, 01:41 PM
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In Reply To: early birds's post @ May 9 2021, 10:08 AM

Finance & Lending

QUOTE
We have seen a pipeline of business lending opportunities develop that we have not experienced for many years
Ross McEwan, CEO, National Australia Bank Ltd


QUOTE
The recent growth in lending to investors is what the banks are now needing to watch carefully as it is generally higher risk and more speculative
Matt Comyn, CEO, Commonwealth Bank of Australia Ltd




... mmm, which one is more prudent??




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"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne
 
early birds
post Posted: May 9 2021, 10:08 AM
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Judging by the negative reaction to the interim profits from the ANZ and NAB this week, it was a disappointing half way reporting season.

ANZ and NAB shares got the thumbs down from investors and the shares fell after the results were released even though they were better than expected.

Westpac saw a more positive reception with a 5% rise on Monday after the result was released but that was undermined by the latest allegations from ASIC against the bank about insider trading in the way a big finance deal was to be protected in money markets.

But in reality the three results – and that from industry leader, the Commonwealth in February – were good – not as upbeat as say four years ago, but certainly better than the Covid-damaged interims a year ago.

And they had to be because of the amount of stimulus and support for banks and the economy from governments and regulators.

If the results had not revealed significant improvements and higher dividends than a year ago, then all the tens of billions of dollars in support would have been for nothing.

And the banks have had some significant support – they have borrowed $100 billion from the Reserve Bank under its Term Funding facility with another $100 billion on offer until June 30 (and these are three-year loans that expire in 2024 which is the year when we will see some real pressures on the banks and some of the customers).

The cash rate is 0.10% and will be maintained until 2024 at least. That will protect net interest margins for the next three years.

Cash profits of the big four jumped 62% in the March half year to $13.8 billion.

The Commonwealth led the way with cash earnings for the half year of $3.89 billion and an interim dividend of a large $1.50; Westpac had cash earnings of $3.54 billion and an interim dividend of 58 cents a share; NAB reported cash profits of $3.34 billion and a 70 cents a share dividend and the ANZ’s cash earnings were $2.99 billion and the dividend was 60 cents a share.

In its usual end of reporting season assessment of big bank profits, accounting firm EY said that the Australian major banks’ half year results “reflect a more positive operating environment than might have been expected this time last year.”

“Fears of large-scale defaults on housing and business debt have eased with the steady economic recovery. While the banks still face an increase in nonperforming loans as a result of the economic downturn, it appears at this stage that the rise will be modest.

“Aggregate cash earnings improved, following the significant credit provisioning undertaken in the first half of 2020. Organic capital generation and a reduction in risk-weighted assets (RWA) have further strengthened the banks’ capital position and have ensured substantial buffers against potential future shocks.”

EY said however bank earnings and profitability “remain under pressure in an environment of ultra-low interest rates and aggressive mortgage competition.”

“Net interest margin (NIM) was declined 6 bps. NIM is expected to remain an ongoing challenge for the banks, given low interest rates and highly supportive monetary conditions that are likely to continue over the medium-term. Average return on equity (ROE) improved to 10.4%, from 6.5% pcp.

(For 2019-20, the big four banks cash earnings totalled $17.4 billion and return on equity was 6.7%, the lowest for 30 years).

And looking to the future, EY said that despite the stronger economic outlook (the RBA revised growth, jobs and inflation forecasts higher this week), “risks are still elevated.”

“The full impact of the economic downturn on asset quality is still playing out, with forbearance programs and income support measures only recently drawing to a close.

“Uncertainty remains around the impact of domestic COVID-19 outbreaks, new variants of the virus and a delayed vaccination rollout that could prolong the pandemic and slow down the economic recovery,“ EY wrote in the report.

EY said the banks’ immediate priorities continue to be managing credit risk and capital and continuing their simplification and digitisation strategies to boost efficiency (ie cut costs).

“They also have a heightened focus on the environmental, social and governance (ESG) agenda, with the pandemic concentrating attention on sustainability.”

------------------------------------------------- from our own share cafe

look at this
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NAB reported cash profits of $3.34 billion and a 70 cents a share dividend and the ANZ’s cash earnings were $2.99 billion and the dividend was 60 cents a share.

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most of peoples whom focus on banks knew that should be

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ANZ reported cash profits of $3.34 billion and a 70 cents a share dividend and the NAB 's cash earnings were $2.99 billion and the dividend was 60 cents a share.

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knida mistake i should be made by someone like me, not these "pro-- analysts" right???? lmaosmiley.gif

joke aside , i reckon ANZ , NAB just caught with " sell on good news" saga given they both SP run up a lot till before their earning release . nothing to worry about it

i reckon..... if they keep low rate for longer then there is property boom. witch is good for the banks

if they gonna raise rate sooner ... then banks profit margin will increase-----good for banks

so one way or the other-----------good for banks for one or two years IMHO though!! tongue.gif


 
plastic
post Posted: Apr 30 2021, 08:49 AM
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Headline in todays NBR. Does anyone recognize the simarities between current climate and conditions and Japan post eighties bubble economy?

Blows the theory underpinning the Phillips J curve out of the water. Everyone is talking inflation, I wouldn't mind betting on deflation with decreasing land prices leading the way.

Any adherents of free market theory are on the losing team. This tide of change is too powerful.

QUOTE
Conditions are perfect for a bank demerger – or two
Westpac’s potential NZ spin-out should be a model for others.




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What did Uncle Mel do to us?
 
 


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