The Aussie banks are very good companies. They are profitable, resilient, well capitalised, well managed, shareholder focused and have a very strong industry and regulatory structure. However, following the significant leveraging of the Australian & NZ households over the last thirty years they are now low growth and remain heavily exposed to housing, funding markets & unemployment risk. Read more
Via UBS. (Click to enlarge)
There was a bit of a furore in Australia this month when the big banks looked like — shock, horror — they would not immediately pass on an official interest rate cut in full to their mortgage clients.
In the end, the big four banks eventually did pass on the 25bps cut to borrowers, but dropped big hints that they may not bow to public pressure in future. Read more
There might be some wiggling about liquidity but the worldwide work of getting banks ready for Basel III goes on. Though there’s been an interesting development in Australia recently.
Australian banks and other savings institutions were this week given some guidance on how they’ll be expected to meet Basel III capital requirements when the Australian Prudential Regulatory Authority (Apra) came out with a discussion paper (PDF) which suggested an accelerated timeline for adopting new rules. Read more
Australia & New Zealand Banking Group, the worst performer among Australia’s four largest banking stocks this year, posted the smallest half-yearly profit increase in 2 .5 years as lending profitability slipped, reports Bloomberg. Net income in the six months to March 31 gained 3% to A$2.66bn ($2.91bn) from the previous six months, the bank said on Tuesday, as provisions for bad debt dropped. Net interest margin, a measure of its lending business, shrank to 2.47%. ANZ’s profit missed the A$2.77bn median estimate of six analysts surveyed by Bloomberg. ANZ’s CEO Michael Smith aims to double profit from Asian business to 30% in the next seven years. The FT adds that ANZ shares fell 1.7% to $23.89 in Sydney at midday and helped drag down banking stocks throughout the region. ANZ had gained 2.3% this year, lagging NAB’s 14% rise and Westpac’s 10% increase. NAB and Westpac are set to announce first-half earnings this week.
A data point for the Australian housing bubble debate.
Bank of America Merrill Lynch analysts have a great report questioning how Australian banks calculate mortgage approvals. It’s been picked up by Macro Business, Banking Day and Naked Capitalism. Read more
Australia’s centre-left Labor government has announced an overhaul of banking regulations aimed at boosting competition even as rising mortgage rates fuel a political backlash against the nation’s four big banks, reports the FT. Treasurer Wayne Swan on Sunday unveiled steps to inject a further A$4bn ($3.9bn) into securitisation markets and help smaller financial institutions better compete, among other measures. The move comes amid public anger after the top four banks – CBA, NAB, ANZ and Westpac – recently raised mortgage interest rates beyond increases in the central bank’s cash rate. The cornerstone of the measures require changes to the Banking Act to allow the issuing of covered bonds – on-balance sheet securitisation common in Europe. The WSJ adds that the moves fell short of public expectations of penalties for banks charging excessive interest on loans.
Hana Financial has sealed South Korea’s largest ever banking deal with a $4.1bn offer for Korea Exchange Bank, fending off a rival bid from Australia and New Zealand Banking Group, Reuters reports. Hana, Korea’s fourth largest bank, will become the country’s third-largest lending institution by assets on completion of the deal. However, financing arrangements remain unclear. Hana’s chairman dismissed suggestions the bank may have been in talks with Carlyle Group and KKR, setting out plans to fund the acquisition using dividends and an equity issue, Reuters adds. A debt sale is also planned, Bloomberg reports.
Hana Financial, South Korea’s fourt-largest financial firm, has revived efforts to buy the 51% stake held by US buyout firm Lone Star in Korea Exchange Bank, challenging Australia’s ANZ bank for control of the lender, reports Bloomberg. Hana may announce a decision on the purchase next week, said a person close to the matter. Hana’s renewed interest may help Lone Star complete a five-year quest to sell control of KEB that has been plagued by probes into the circumstances of the fund’s 2003 purchase. While the talks may threaten a separate plan by ANZ Bank to buy KEB, Hana has also said it is interested in Woori Financial, which Seoul plans to privatise by next year.
Australia and New Zealand Banking Group on Thursday booked a 53% increase in its full year net profit, as lower charges for problem loans helped bolster earnings, reports the WSJ. ANZ said net profit for the year to Sept 30 rose to A$4.5bn ($4.4bn) from A$2.94bn a year ago. The group’s closely-watched cash profit – a measure which strips out volatile items – rose to A$5.13bn from A$3.38bn, beating market expectations. The average estimate of five analysts polled by Dow Jones Newswires was for a cash profit of A$4.88bn.
ANZ, Australia’s fourth-biggest bank, agreed to pay ING Group €1.1bn ($1.6bn) in cash for its stake in their insurance and wealth-management venture, reports Bloomberg. ING will sell its 51% stake in ING Australia and ING New Zealand to ANZ Bank, for a net profit of €300m, it said. ANZ shares were halted in Sydney trading pending an announcement. ING is seeking funds to repay the €10bn lifeline it received in October from the Dutch state.
What do you know – Australian banks punch way above their weight, according to new figures that show Australia’s four big retail banks and Macquarie, the investment bank, have raised a combined $82bn of government-guaranteed debt since October.
As the FT reports on Monday, the five banks accounted for more than 10 per cent of total global issuance of guaranteed debt since the collapse of Lehman Brothers, according to Dealogic – far more than their global position in terms of assets or capital. Read more
Australia’s ANZ on Tuesday agreed to buy part of Royal Bank of Scotland’s Asian banking assets for $550m in a deal which bolsters its strategy to become a “super-regional” lender, reports the FT. ANZ will buy RBS units in Taiwan, Singapore, Indonesia, HK, the Philippines and Vietnam. Bloomberg adds that RBS is selling or shutting businesses in two-thirds of the 54 countries in which it operates after posting the biggest loss in UK history last year. ANZ shares rose 1.5% to A$19.28 near midday in Sydney.
Standard Chartered and ANZ have both entered exclusive talks to acquire separate parts of the Asian retail and commercial assets being sold by Royal Bank of Scotland. Both bidders were last week granted preferred bidder status for different RBS assets, in effect giving them up to 45 days to seal a deal. The move means that StanChart is now in pole position to acquire RBS units being sold in China, India and Malaysia, while ANZ is in line for assets in HK, Taiwan, Singapore, Vietnam and Indonesia.
ANZ, one of Australia’s top banks, may buy Royal Bank of Scotland Group’s units in at least five Asian countries as the government-controlled bank splits its assets in the region to attract buyers, reports Bloomberg. ANZ is in advanced talks to acquire RBS’s retail and commercial-banking units in HK, Taiwan, Singapore, Vietnam and Indonesia. Standard Chartered is seeking RBS’s businesses in China, India and Malaysia. The assets on sale may fetch about $1.5bn.
The sale of Royal Bank of Scotland’s Asian assets is likely to drag on through the summer after failing to attract enough bids amid uncertainty surrounding the divestment. Potential bidders had until last weekend to table non-binding offers, but HSBC and Standard Chartered, seen as two of the three front-runners, have instead sought further information from RBS. Australia’s ANZ, the third bidder, said Wednesday it had made an offer for “selected [RBS] businesses” alongside a capital raising of up to A$2.85bn ($2bn) to help fund any acquisition.
ANZ, Australia’s fourth largest bank, is going up against the big boys in the race for some of RBS’s Asian assets, and on Wednesday signalled it means business by launching an A$2.5bn ($2.3bn) rights issue to fund a prospective bid.
As the FT reports, ANZ said on Wednesday it had submitted a non-binding proposal for “selected [RBS] businesses”, adding it was only one of a number parties – previously understood to have also included HSBC and Standard Chartered (both later quietly played down interest) – taking part in the auction. The RBS assets, which include retail and commercial banking operations in China, Taiwan, Hong Kong, India, Pakistan, Singapore and Indonesia, are said to be worth A$2-$2.5bn. ANZ has not identified which specific assets it is after, but China and India are stated priorities. Read more
ANZ, Australia’s fourth-largest lender, plans to raise A$2.5bn ($2bn) by selling shares to bolster capital as it bids for Royal Bank of Scotland’s Asian assets, reports Bloomberg. ANZ will sell the shares to institutional investors at A$14.40 each, a 7.5% discount to its last traded price, and will not increase the size of the offer, it said on Wednesday. The bank will also sell equity to retail shareholders and will reserve the right to scale back applications under the share-purchase plan if total demand exceeds A$350m.
ANZ, Australia’s fourth-largest lender, said on Wednesday that profit fell 28% in the first half as bad debts almost doubled, reports Bloomberg. The stock slumped nearly 5%, the most in more than two months, after the bank reported that net income dropped to A$1.42bn ($1bn) in the six months to March 31, from A$1.96bn a year earlier. The bank’s credit impairment charge jumped 98% to A$1.44bn.
Regulatory uncertainties surrounding the sale of Royal Bank of Scotland’s Asian assets could limit the price that bidders are prepared to offer and possibly delay any divestment. The stricken UK bank last month started a process to offload its retail and commercial operations in eight Asian countries. The move has attracted interest from groups including HSBC, Standard Chartered and ANZ, the Australian bank, as well as smaller domestic players.
National Australia Bank and ANZ Banking Group said rising bad debts are eroding profit growth as losses spread from financial markets to the wider economy, reports Bloomberg. NAB, the country’s biggest by assets, on Friday said quarterly earnings stalled at A$1.1bn ($716m) as provisions rose 19% from the preceding three months. ANZ, the fourth-biggest lender, forecast a fall in first-half profit of more than 15% from a year earlier. Earlier this week Macquarie Group, Commonwealth Bank of Australia and Suncorp-Metway warned profits would fall as the economy slumps and delinquent loans rise.
CBA, Westpac and ANZ raised $5.7bn this week selling stock and bonds to boost balance sheets dented by rising defaults, reports Bloomberg . CBA, the second-biggest bank by market value, offered government-backed debt as part of a A$1.25bn ($824m) bond sale Tuesday and said Wednesday that it would sell up to A$750m in stock to Merrill Lynch. Westpac, the biggest, sold A$2.5bn in stock at an 11% discount and $1.5bn of three-year 3.25% notes, sending its shares down by as much as 10% in Sydney. ANZ, the No. 4 bank, sold $1.25bn of three-year 3.2% bonds and $500m of two-year floating-rate notes. Australian financing costs declined for the first day in six as the money raised eased banks’ need to hoard cash to meet year-end funding requirements. Lex meanwhile notes the “new benchmark for banking conservatism” set by National Australia Bank and ANZ, where recent book-builds have raised tier one above 8%, and says raising money when a bank can, in an up-market, is “justifiable”.
ANZ, Australia’s third-largest lender, has appointed Sir Rod Eddington to succeed long-standing chairman Charles Goode from the middle of next year, in a move designed to boost the credibility of its board. Sir Rod, the non-executive chairman of JP Morgan Australia and former chief executive of British Airways and Cathay Pacific, sits on a number of boards including Rio Tinto, News Corp, China Light & Power and John Swire & Son. Goode has decided not to seek a full term when he faces re-election at next month’s annual meeting. Sir Rod’s appointment comes at a time when ANZ is suffering reputational damage. Although Goode is credited with hiring two first-rate chief executives during his 13-year stint as chairman, he also presided over recent troubles that hurt the bank, including the collapse of local stockbroker Opes Prime and major losses in ANZ’s non-customer related trading business.
ANZ has secured a 99-year licence to open a subsidiary in Vietnam, making the Australian bank the third foreign operator to be allowed to open wholly-owned banks in the country. Last month HSBC and Standard Chartered won approval to be the first overseas banks to incorporate their local operations in Vietnam, a country with a population of 87m but fewer than 10m bank accounts. Vietnam’s decision to open its banking sector to foreign competition was a condition of its accession early last year to the WTO but the government has also been keen to encourage competition to strengthen Vietnam’s banking sector. ANZ has been in the country since 1994, and owns 10% of Sacombank, Vietnam’s leading commercial bank. The Australian lender took a similar stake in Saigon Securities last year.
Apart from Australia’s lead in the current Tri-nations rugby contest, things are turning distinctly pear-shaped Down Under, notes Lex. As they reveal bad news and more bad news, banks are jacking up provisions with gusto, the Aussie dollar is sliding and the stock market is tanking; the ASX index has shed 17 per cent in the last couple of months.
ANZ, the fourth biggest lender, referred to deterioration in global credit markets and legacy problems when it unveiled $1.1bn worth of provisions on Monday. Its shares plunged more than 13 per cent before recovering in the afternoon to a slightly-less-than-abysmal level of A$15.81, down 11 per cent at virtually half their A$31.55 peak recorded in the last 12 months. Read more
ANZ bank, Australia’s third-biggest lender, issued a profit warning on Monday, forecasting more than $1bn in bad debt charges, as the global credit crisis started to hurt the country’s previously buoyant banks. The news sent ANZ shares down as much as 13.2% in early trade and dragged down other financials. ANZ said it was likely to book provisions of around A$1.2bn ($1.1bn) in its second half, news that came only three days after bigger rival National Australia Bank shocked the market with another A$830m in losses related to the credit crisis, sending its shares down 15%. ANZ said that 2008 cash earnings per share were likely to fall 20% to 25% on the previous year on credit impairment costs. By mid afternoon, ANZ shares had recovered slightly to trade down 9.2%.
What happened to the old image of the decorous and discreet bank chief?
How refreshing. The chief executive of ANZ is “somewhat pissed off.” Aren’t we all, Mr Smith.
Makes you wonder if a little antipodean frankness might have gone down better with beleaguered investors in US banks, or in RBS say, following Tuesday’s monster writedowns and outsize cash call. Attempts to brazen it out have been received poorly by shareholders and the media.
Mike Smith was referring to the Australian bank’s backing of Opes Prime, the private client broker which collapsed last month and is now being investigated by the country’s regulator. ANZ, along with Merrill and Dresdner Kleinwort, were Opes’s largest secured creditors and are now owed more than A$1.2bn. Read more
ANZ, Australia’s third largest bank, is among bidders shortlisted to buy a 53% stake in Wing Lung Bank, a mid-sized Hong Kong lender. The Wu family, which founded Wing Lung 75 years ago, put its controlling stake in the publicly listed bank up for sale last month. Other banks reported to have been shortlisted include China’s ICBC and Bank of Communications. The winner of the majority stake would have to make a general offer for the entire bank. Based on Thursday’s closing price of HK$143.80, Wing Lung has a market cap of HK$33.4bn ($4.3bn).
Tougher global credit conditions and market volatility on Monday forced ANZ to set aside A$975m ($904m) of provisions against bad and doubtful debt for the 2008 first half, an increase of more than 70% over the same period last year. Australia’s third-largest lender, which took A$567m in provisions for the whole of fiscal 2007, saw its shares fall about 7% to A$22.01 on Monday. The news comes after a difficult few months for ANZ, which had backed Opes Prime, the failed broking house, and Tricom Equities, another troubled broker, and had provided financing to Centro Properties, the struggling shopping mall owner.