ANZ Earnings Leap 37 Per Cent
Australian banking major ANZ reported a 37 per cent leap in third quarter underlying profit, adding that there were further “opportunities” for growth in the country. The robust growth in earnings and optimistic outlook for the lenders domestic operations, drove ANZ shares higher against a backdrop of a weaker overall market.
Despite the good result, ANZ Chief Executive pointed out the risk of weak global economy and warned that banks continue to face increased uncertainty and higher risk.
“There is global agreeance that global growth will be softer over the near-term,” Mr Smith told a briefing after the bank issued its quarterly update.
Australia’s third largest bank as measured by market capitalisation posted a third quarter underlying profit of $1.3 billion.
ANZ’s robust earnings growth were driven in large part by a reduction in the lenders bad and doubtful debt, which had unexpectedly risen during the second quarter.
ANZ posted an underlying profit of $3.6 billion during the first three quarters of its financial year, up 26 per cent.
ANZ’s income rose 9 per cent during the first three quarters to stand at $11.6 billion, compared to the same time frame in the previous year, whilst its provisions for bad debt are almost 38 per cent below the average rate it experienced during the first half.
“Banks now have a permanently high cost of doing business, rates for deposits have never been as high. We have to think differently about our business. We need to drive productivity and innovation decisions even harder to stay ahead of the game.” Mike Smith Said.
Despite a pessimistic outlook for the global economy, Mr. Smith remains sanguine about the prospects for Australia’s economy.
“I’m actually very positive on Australia, We are looking for opportunities to grow our retail, commercial and wealth businesses,” he said.
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Australian Stock Exchange Launches Fear Index
The Australian Stock Exchange (ASX) says it intends to introduce a new volatility index, also known as a fear index, which would gauge the level of skittishness in the market for listed Australian stocks.
According to the ASX, the index would be modelled on the Volatility Index which is quoted and traded on the Chicago Board Option Exchange, which is usually referred to as the VIX or fear gauge.
Like the VIX, the Australian volatility index will be constituted from a number of different 30 day call and put options, which will seek to poll the markets expectation of volatility for a 30 day period.
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ANZ Lifts Excessive Debt Burden From Pensioner
Australian banking major ANZ says it will eliminate $18,600 in debt racked up by pensioner on his credit card, after the lender began steadily increasing his credit limit over the last nine years.
Alec Stubbs, a 72 year old pensioner, who has lived on a pension for several years, receiving $485 a fortnight, had his credit card limit increased to $46,000 since 1991.
“It’s clear this customer’s credit limit should not have been increased to this extent, and due to the exceptional circumstances we have decided to clear this debt to ensure his family is not placed under any additional stress at this time,” ANZ spokesperson Stephen Ries told the Herald Sun.
Mr. Stubbs also holds a Commonwealth Bank credit card, whose limit has steadily climbed from $3,500 in 2003, to $25,000 in 2006.
CBA said through a spokesperson that the lender had ceased offering unsolicited limit upgrades to customers who live on welfare payments since 2007, with those type of customers who request a higher credit limit, required now to pass a financial test.
Mr. Stubbs wife only recently learned that her husband carried $36,000 in credit card debt, when opening his mail whilst Mr. Stubbs was in hospital receiving treatment for cancer.
“I nearly died,” she said. “How in the hell could they think a pensioner could really afford this? We are not secret millionaires. Even if he asked for this, don’t they check into people’s circumstances before they throw money around?”
Mr. Stubbs and his wife Pauline have maintained separate bank accounts throughout their 53 year marriage, which kept Mrs. Stubs being in the dark regarding the minimum monthly payments, which were often hundreds of dollars a month.
In August the federal government promised new measures that would mean credit card companies would not be allowed to increase credit limits without agreement from customers.
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Competition Regulator Samuel Recuses Himself From AXA Deal Deliberations
The chairman of the Australian competition regulator, the ACCC, has said he will recuse himself from the decision making process of its review of the proposed $13 billion NAB-AXA Asia Pacific Holdings merger.
According to reports, NAB is a lender to Graeme Samuel, chairman of the Australian Competition and Consumer Commission investment in the troubled retail chain DFO.
As a result Mr. Samuel has indicated he will step aside from the review that is considering the proposed NAB APH merger.
NAB said both itself and AXA APH had been consulted with first, and both parties say they were unconcerned with Mr. Samuel continuing to be involved in the deliberations. However the ACCC says it has accepted Mr. Samuel’s decision to “cease to be involved in any further commission deliberations on the NAB/AXA APH merger proposal”.
Mr. Samuel has an interest in the holding company Austexx which manages the DFO discount shopping empire, and is also teetering on the edge of bankruptcy.
Mr. Samuel’s investment was made through a blind trust, which controls his investments.
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Financial Planners Starting To Avoid Managed Funds
The results of a new survey suggest that under pressure from clients, financial planners and advisers have begun to avoid managed funds. According to the results of the report, planners are increasingly investing money directly into equities and other listed investments.
Investment Trends (IT), a market research firm which authored the report said that unlisted managed funds gained ground over the last year, and only half of the cash collected by planners was invested in managed fund, down 62 per cent from the previous year.
The survey which polled 700 planners during April and May suggests that planner’s estimate only 39 per cent of funds allocated would be directed towards managed funds by 2013.
Mark Jones of IT said that nearly 20 per cent of all new money was being allocated towards direct equities investment, and that asset allocation into exchange traded funds, real estate investment trusts and managed accounts has also risen.
“Planners have been gradually increasing their use of direct shares and other listed investments since 2008,” Mr Johnston said. “But this year has seen a dramatically larger shift.”
Approximately one third of planners can be described as high users of direct investment strategies, where client funds are allocated towards equities, ETF’s, with only 7 per cent of inflows from this groups allocated towards managed funds.
“That appears in part to be a response to . . . increased investor fee aversion and dissatisfaction with managed fund performance,” Mr Johnston said.
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HSBC Australia Makes Two Additions To Its Executive Committee
HSBC Australia, which over the last few weeks has embarked on a strategy of expansion in Australia, has boosted its executive committee by making two new additions.
Chris Russell the lenders head of global banking, and Gavin Powell head of global markets are the latest additions to HSBC’s Australia’s executive committee.
Mr. Powell will oversee HSBC’s domestic sales and trading business, as well having responsibility for overseeing its debt capital markets business.
Mr. Russell, who previously served HSBC as a director of multinationals, will now be responsible for the corporate and institutional client base in the country, including corporate financing, syndication and advisory.
The promotion follows the appointment of Tony Cripps as chief executive of HSBC, Philippines; Cripps was head of global banking and markets.
Paulo Maia, chief executive of HSBC Australia says the lender has embarked on a strategy of expanding its client base across multinationals and large domestic corporate, whilst the global markets business is seeking to increase its activity and profile in the institutional sector.
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RACQ Warns Australian Motorists To Watch The Price Of Petrol
“Cheap Tuesday” used to be the best day to fill the petrol tank, however that is now slowly changing with “savings Sunday” becoming the prime day to fill up the fuel tank.
For many years, Tuesday was the best day to top up one’s fuel tank, as a result of a fuel cycle set by companies. However the oil companies in a bid to maintain revenues began varying which day was the cheapest to obtain fuel, as they sought to keep consumers off balance.
For example in Queensland, cheap Tuesday eventually became frugal Friday, and ultimately ended up becoming savings Sunday.
The RACQ has warned motorists in Queensland to closely monitor the price of petrol quoted on service station price boards, as a means of avoiding paying too much for fuel.
“We’ve seen the low point in the region’s weekly price cycle progressively move later into the week in recent months. Buying petrol mid-week could mean paying around 10 cents a litre more than topping up over the weekend. They’re trying to confuse motorists as to what the cheapest day of the week is.” RACQ spokesman Gary Fites said.
Mr. Fites added that as the pricing pattern shifts accelerate, there is every reason to believe that cheap Tuesday could make a return.
“It’s more important than ever for motorists to watch the price boards if they want to fill up at the best price,” he said.
“The good news for savvy buyers is that regular unleaded and E10 petrol prices are almost at wholesale levels on the cheapest days.”
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NAB Endorses Credit Card Law Reform
Australian banking major, National Australia Bank, once again differentiating itself from its big four rivals over exception fees, says that credit card law reform would benefit consumers.
Lisa Gray, who runs the lenders personal banking division says that NAB has already implemented changes to its credit card portfolio, which are consistent with the federal government’s proposed changes to credit card laws.
Ms. Gray made her comments in response to the announcement made by current Prime Minister Julia Gillard, that a re-elected Labour government would seek to ban lenders from charging customers who exceed their credit card limit.
Under existing regulations, customers who exceed their credit limit can be hit with a $25 fee.
Labour is seeking to change this, so that lenders would be regulated in a way that would prevent them from allowing customers to over draw on their credit card without the prior explicit consent of the customer.
The government also proposes to ban unsolicited offers to extend credit limits. whilst NAB has already has already done away with its over-limit fee on credit cards and cut its late payment fee, Ms Gray said in a statement.
NAB said nothing however about whether it would also end the practice of unsolicited credit limit extensions.
“While further consultation would be needed, some sensible credit card law reforms would benefit consumers and banks offering the fairest and best value,” NAB said.
NAB’s position is at odds with its other big four rivals, with a banking lobby group suggesting that further regulation was unnecessary, since the vast majority of Australians used their credit cards responsibly.
In 2009 NAB distanced itself from its rivals by cutting exception fees, and undercut mortgage interest rates, as it sought to improve its market share, and build goodwill with its customers.
In 2009 NAB sought to differentiate itself from its rivals by cutting exception fees and undercutting interest rates on mortgages to improve its market share.
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Australian M&A Activity Drops
Mergers and acquisition (M&A) activity within the Australia and New Zealand region has slowed during 2010, with the values of transactions more than halving this year.
Whilst the number of deals fell to their lowest level in over four years, according to a report authored by Thompson Reuters suggest that the number of deals first approved by company directors and later withdrawn also doubled.
According to the report nearly $45.3 billion in transactions were withdrawn over the last year, the highest level it has ever been in ten years.
The past calendar year, 2009, had the most deals withdrawn (62), compared with 52 so far this year.
The value of deals announced and followed through on so far this year is US$30.8 billion, down 52 per cent from a year earlier and its lowest level since 2006.
The value of M&A transactions for the entire Australiasian region including foreign deals was US$71.3 billion, a decline of 23 per cent from the US$93.1 worth of transactions recorded during the same period in the previous year.
According Anthony Sweetman, head of M&A for UBS, activity had been made up of predominantly cross border transactions, with foreign investment destine for Australia as opposed to overseas investment from domestic corporations.
Many bankers believe that the number of opportunities that occur for Australian companies invest internationally through a merger or an acquisition will only increase, since there has been extensive consolidation already, and the number of domestic opportunities are limited.
“You would expect the foreign investment to continue and, over time, we will see a greater proportion of outbound investment,” Mr. Sweetman said.
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Leadership Change At St. George
Rob Chapman chief executive of BankSA has been appointed by Westpac as a replacement for outgoing St. George chief executive Greg Bartlett.
Westpac which acquired St. George in 2008 for $15 billion announced on Friday that Mr. Bartlett would be retiring from his position as chief executive of St. George on December 1st, after nearly 30 years with the lender.
Mr. Chapman, who has run BankSA, which is one of the largest regional lenders in South Australia for over 8 years, has also served on the executive committee for the same period of time.
Mr. Chapman has also worked as an executive at CBA, Colonial First State Bank, and Prudential.
“We are very fortunate to have an executive of Rob’s calibre ready to step into the role as St George’s CEO,” said Westpac CEO Gail Kelly.
“His deep multi-brand expertise at St George and BankSA, combined with exceptional banking and commercial acumen, make Rob an ideal appointment.”
Mrs. Kelly, who herself previously ran St. George before the lender was acquired by Westpac described Mr. Bartlett as an “excellent banker”. Mrs. Kelly lauded Mr. Bartlett’s role in the integration of the two lenders after a merger which created Australia’s second largest banking group by market capitalisation.
“The Westpac-St George merger has exceeded our already high expectations, and this is in no small part due to Greg’s efforts,” she said.
“Under his leadership St George has continued to build on the distinct brand attributes that make it so successful, and its customer advocacy remains the highest of the five largest banks.
“He will leave St George in great shape.”