American Express also benefited from having to put away less than half as much money to cover losses as it did in the previous year.

“While spending among affluent consumers and businesses remains strong, today’s card members are borrowing less and paying down more of their outstanding debt. We remain cautious about the economy and the challenging regulatory environment.” chairman and chief Executive Kenneth Chenault said.

The figures bode well for American Express which seems to have rebounded from last year, where its cardholders spent less on their cards, and fell behind its peers.
The card company like its rivals now face the prospect of encouraging increased spending without loosening its credit standards.

American Express, unlike most rivals, issues credit cards and is subject to legislation enacted earlier this year that limits rate increases, which will bite into income.

For the latest quarter, American Express posted a profit of $US1 billion ($1.12bn), or US84 cents a share, up from $US337 million, or US9c a share, a year earlier. Revenue, net of interest expense, rose 13 per cent to $US6.86bn.

The company’s US card business, its largest by revenue by far, swung to a profit as revenue, net of interest income, rose and provisions for losses plunged 56 per cent.

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The company has not faired well after its business was negatively impacted by bad loans made by its banking division, which reported its seventh consecutive drop in loan loss provisions.

Net charge-offs, or loans that E*Trade doesn’t think it can collect, were $US225 million ($252m), falling 42 per cent from a year ago.

E*Trade gave its earnings a boost by releasing US$60 million from its loan loss as opposed to adding to it, suggesting that the company now believes it has enough capital to cover any impending losses.

The in improvement in the company’s loan portfolio during the second quarter was the difference between E*Trade reporting a profit rather than a loss.

In an interview with Dow Jones Newswires, E*Trade chief executive Steven Freiberg said: “The most significant dollar change (for the company) has been continued improvement in delinquencies and therefore write-offs and provisions in the legacy loan book.”

Mr. Freiberg took the helm at E*Trade  on April 1^st, and given the current state of the U.S. economy says the company would probably experience a continued decline into 2011.

A closely followed metric with E*Trade is its daily average revenue trades (DARTs), which it reported as being 170,000, up ten per cent from the first quarter however still 16 per cent below where it was a year earlier. The broker like its rivals benefitted from the “flash crash” on the U.S stock market in May 6.

Mr. Freiberg said, however, that trading in June was “not anywhere near as robust,” adding that the “residual effects of the flash crash have caused more investors to become concerned”.

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The banking oligopoly in Australia is normally a cozy affair, and Mr. Norris criticizing a rival is indeed surprising.

Mr. Norris said that NAB arguing that CBA was hurting the economy because it was neglecting the business sector preferring to concentrate on less risky mortgage lending was “rubbish”

“I think the real issue is that we have a bank (NAB) that has performed poorly for many years and missed out on an opportunity when the mortgage market opened up,” Mr Norris said in an exclusive interview with The Australian. “Now they’re blaming everyone but themselves.”

CBA and rival Westpac took advantage of the historic opportunity that the financial crisis presented to establish their dominance in mortgage lending.

The two lenders grew their mortgage books organically by specifically targeting the influx of first time home buyers, which was brought about by the governments fiscal stimulus.

The two lenders increased their market share through acquisition, with CBA acquiring Bankwest and Westpac swallowing St. George.

Mr. Norris’s comments suggest that the industry has now become openly hostile towards NAB, as it seeks to establish itself as a trusted community minded lender.

The war of words erupted in June, when Mark Joiner, NAB’s finance director suggested that the banking industry was earning super profits on its mortgage book.

The allegation came at a very sensitive moment, when the resource industry was under pressure by former Prime Minister Kevin Rudd’s proposal that it be charged a super profits tax, leaving other industries feeling vulnerable and wondering whether they too would be targeted with such a tax.

Mr. Joiner said that the Basel II agreement which governs banking capital adequacy, meant that the amount required to be held against a mortgage halved, meaning that the return on equity for such a loan doubled to 45 per cent.

Mr. Joiner then drew attention to CBA and Westpac and their bias towards mortgage lending, with home loans accounting for more than 60 per cent of their balance sheet, compared to less than 50 per cent for NAB.

“Australia should have a balanced economy; not a big skew to mortgage or business lending,” Mr. Joiner told The Australian.

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The Bloomberg news service which cited unnamed sources close to the negotiations saying three publicly traded REIT’s including Lexington Realty Trust, National Retail Properties and Realty Income Corp have been approached recently. According to the sources several Private Equity firms have also expressed their interest in Sprint.

Macquarie declined to comment through its spokesperson, whilst the interested REIT’s also either declined to comment.

Sprint Finance Corp owns or finances approximately 1,200 retail properties across 45 states, The Scottsdale, Arizona-based REIT has listed assets valued at US$3.5 billion on its balance sheet., and debts of US$2.9 billion.

A consortium including Macquarie and Icelandic bank Kaupthing Bank hf acquired Sprint in 2007, for US$3.5 billion and $1.9 billion of assumed debt.

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The proposed deal would see the two lenders combine forces to increase their product and service offerings to client, in an environment where there is increased demand for global capability.

“The deeper partnership, which could take the form of a joint venture, would combine NAB’s offering in the Australian asset servicing market with BNY Mellon’s extensive global capability,” NAB said in a statement.

NAB says that it still needs to work out specific details of the partnership, which it would explore over the next few months.

NAB and BNY Mellon Asset Servicing have had a relationship since 1996 when BNY Mellon was appointed NAB’s global custodian for all foreign assets of NAB’s custody client base.

Simultaneously NAB was appointed by BNY Mellon to serve as its Australian and New Zealand sub-custodian for its global clients.

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The Commonwealth Bank Business Sales Indicator (BSI) fell by 0.3 per cent in trend terms in June after a similar decline in May. The decline over the last quarter is the worst result since the start of 2008.

Craig James, chief economist at CommSec, who wrote the BSI report, suggests that the chief reasons behind the decline were higher interest, doubts over the state of the global economy, rising utility charges and council rates, all of which were weighing on consumer minds.

“While we are hopeful about a lift in spending later in the year, future Reserve Bank (of Australia) rate decisions will be pivotal. Consumers feel as (if) they are under siege at present and they need a period of interest rate stability so they can focus on both the positive and negative influences on the household budget.” Mr. James wrote in the report on Tuesday.

During the last year in trend terms, the BSI has risen just 0.7 per cent, registering its slowest growth in 17 months.

The trend pace of growth has consistently slowed over the past seven months, exactly tracking the slowdown in the Australian Bureau of Statistics retail trade series, Mr James said.

In trend terms, the weakest sectors during June were telephone order providers, mail order, retail stores, and automobiles and vehicles.

The strongest gains registered in June in annual terms were personal service providers, amusement and entertainment.

The Commonwealth BSI is obtained by tracking the value of credit and debit card transactions processed through CBA merchant facilities.

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Skander Malcolm who runs GE Capital in Australia says that because the banks have large depositor bases they were able to fund raise more effectively than smaller lenders such as GE Money.

“We’re trying to access capital markets, they are accessing capital markets as well. Certainly, it’s a lot easier for them because they have a whole lot of deposits on hand.” Mr. Malcolm told Sky Business News.

Mr. Malcolm added that the European Sovereign Debt Crisis had had an impact on the cost of funding.

“But from our perspective, we’re well funded through this year and into next (year), so we’re pretty comfortable with where we are. But for some of the organisations out there trying to raise funds, it’s not exactly a liquid market, so there are certainly challenges still out there.”

Mr. Malcolm stressed that GE Capital was not aiming to compete with the major lenders, preferring instead to maintain a specialist position.

“When we target specialist segments, particularly in the retail side but also in the commercial side, then we compete successfully. We generate returns that are anywhere between 20 and 40 per cent better than major banks, and that’s because we stick to segments that we know and understand.” he said.

During the global financial crisis GE Capital exited the home and car loan segments, because it was felt that the company would find it tough to fund those loans.

“Our funding requirements are a lot easier now, having made those decisions, We have no plans to move back into mortgage or auto.” Mr. Malcolm said.

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NAB’s extended exclusivity agreement with AXA APH and its French parent AXA SA expires at 0001 AEST on Friday. After expiration of the exclusivity arrangement, both APH and AXA SA are then free to terminate the agreement and begin negotiations with other interested bidders.

Sydney based Australian wealth manager AMP is still considering whether it intends to submit an improved bid to APH’s board, after its initial bid which valued APH at $12.85 billion lapsed.

NAB, whose initial bid was rejected by the competition regulator on the grounds that competition would be stifled within the wealth management space was granted an extension to the original exclusivity arrangement on June 1st, to allow the lender more time to address the regulators concern and win its approval for the deal.

A spokesperson for Australia’s third largest bank told the APP that discussions with third parties over the possible sale of APH’s North and Wealth.net platforms were indeed “progressing”, but that he could not comment on what stage the negotiations were at.

NAB also remains in talks with the Australian Competition and Consumer Commission (ACCC), which on June 25 said there still was no new information that could be released.

The regulator hat still not published its public competition assessment, which is a report that provides insight into why it failed to give its approval for the proposed NAB acquisition. The regulator has not set any date for its disclosure.

The ACCC rejected NAB’s bid on the grounds the deal would substantially lessen competition for retail investment platforms for investors with complex investment needs.

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Ms. Cobley who acts as treasurer for the largest bank in Australia, as measured by market capitalisation holds views that are largely similar to wider sentiments felt by her peers and investors, many of whom also believe that wholesale borrowing costs are likely to head higher to begin with, before receding.

Global investors of late have made demands for higher risk premia in response to the European sovereign default crisis, and almost everyone including Australia’s highest rated lenders have been affected, despite their AA ratings.

CBA says it is well placed to handle volatility in funding costs since it was well ahead of its funding requirements, but added that a heavy fund raising schedule for both governments and corporations expected to take place during the third and fourth quarters would also take its toll on the market Ms. Cobley said.

Ms. Cobley declined to comment on the possibility that higher borrowing costs would mean that lenders would be forced to raise their interest rates outside official moves by the central bank.

The problems affecting the European Union are likely to negatively impact pricing on local bank debt, despite the lack of exposure and solid fundamentals.

“We think there is a possibility spreads will go wider than they are now. Australian banks have been caught up by perceived increased risk in the market generally. Do I think it’s fair pricing? I don’t,” Ms Cobley said.

New global rules on the capital requirements and holding of liquid assets were also another area banks were feeling pressure. Lenders will be required to hold more liquid assets on their balance sheet whilst boosting capital buffers.

“It’s inevitable our liquid assets holdings will get larger and our costs will go up as a result of that,” Ms Cobley said. Australia’s four largest banks have a collective annual funding task of $140 billion, with CBA’s share $40bn to $45bn. About half is sourced from deposits.

Because of a limited domestic investor base, Australia’s banks borrow heavily offshore.

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According to the results of the latest survey by Dun & Bradstreet, which polled consumer expectations across 1,205 individuals in Australia, nearly half or 49 per cent said they believed that interest rates would rise further, and the hikes would dent their finances.

The credit reporting agency completed the survey in June, one month after the Reserve Bank of Australia (RBA) lifted the official cash rate to 4.5 per cent, its sixth rise in eight months.

Households that include dependent children will feel more financial stress, with 55 per cent of respondents who have children, saying that the impact of rate rises would negatively affect their finances, compared with 43 per cent of households that do not have children.

The survey suggested that the stress from rate hikes would only translate into additional debt for just 20 per cent of households.

According to the survey, which examined future spending in September, nearly half of all individuals polled aged under 50 planned to use credit to pay for expenses over the period, whilst only a quarter of all Australians aged over 50 said they intended to do the same.

The RBA’s credit and charge card statistics for May 2010 showed the average credit card balance reached $3,248 in May, an increase of five per cent in 12 months.

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