BNP joins attack on ‘cult of equities’ (AFR, 19/3/2012)

- The bank has reduced its lending in Australia and more than halved its assets in the past four years.

- Mr Mahout says Australia doesn’t have a mature corporate bond market even though it is ‘swimming in liquidity’ from super.

- He says the focus needs to shift to infrastructure spending.

BNP Paribas Australia and New Zealand chief Didier Mahout says the lender is moving to a less “capital greedy” business model in the face of tougher capital requirements.

Mr Mahout remained unapologetic about the French bank’s decision to stop lending aggressively in Australia and more than halve its assets in the past four years.

In a wide-ranging interview, Mr Mahout also joined the attack on Australia’s “cult of equities”, saying the current capital allocation of about 80 per cent in equities, did not suit the current needs of the Australian economy.

He said Australia was a “lacking country” because it did not have a mature corporate bond market, even though it was “swimming in liquidity” thanks to the superannuation system.

CBA adjusts lending role as blue-chip companies can borrow cheaper directly from capital markets

AFR - PUBLISHED: 21 FEB 2012

KEY POINTS

-  Some companies can borrow cheaper directly from capital markets, says CBA’s Ian Saines.

-  Bank loans are likely to continue to be a source of important debt funding for all companies.

Commonwealth Bank of Australia executive Ian Saines has warned that “permanently” higher bank funding costs are forcing the bank to change its business lending model as blue- chip companies borrow cheaper directly from capital markets.

In recent months, Telstra, Woolworths, Wesfarmers and BHP Billiton issued debt in the international bond market at far cheaper rates than the major banks.

Gonski report - Vast education ambition a massive headache - AFR 20/2/2012

LAURA TINGLE Political editor - AFR

Let’s put politics aside for a moment and consider the vast aspiration for Australia’s education future laid out in the Gonski report.

It is a report that goes to the heart of the productivity debate and to improving educational standards.

The recommendations of the review of school funding go so much further than a debate about rich schools losing money or political positioning for the next election.

Let’s even put aside the huge price tag it comes with and first try to understand the aspirational model the report outlines.

David Gonski says Australia’s school system should be funded on a per student basis, rather than a per school basis as is currently the case.

CBA results ROE etc  - CBA chief hits back at Swan claims – AFR 16/2/12

PUBLISHED: 16 FEB 2012 00:05:00 | UPDATED: 16 FEB 2012 08:17:48

JOHN KEHOE

Commonwealth Bank of Australia chief executive Ian Narev has rejected claims by Treasurer Wayne Swan that Australian banks are more profitable than international peers, and revealed CBA had been losing money on new home loans before lifting interest rates this week.

Mr Narev called for critics to use facts when scrutinising banks, and rejected the Treasurer’s argument that the banks’ profit margins on loans had returned to pre-financial crisis levels.

“The fact is that at the rates that home loans were at prior to the move we had on Monday, writing a new home loan was not profitable,” Mr Narev said. “That is not a good, sustainable position for a financial institution to be in.”

Mr Swan has slammed the banks for increasing interest rates independently of the Reserve Bank of Australia and argued that their profits, or return on equity (ROE), were much higher than most of their global peers.

The Treasurer kept up the pressure on CBA yesterday, after it unveiled a 7 per cent rise in first-half cash profit to $3.57 billion.

Covered bond issue to show up funding costs – AFR/10/2/2012

Westpac has confirmed it is considering hybrids.

Banks will have a better gauge of the outlook for funding costs today following a covered bond issue by Westpac Banking Corp in Europe overnight.

Commonwealth Bank of Australia is also said to be considering issuing hybrids – securities that are a mix of equity and debt – as banks scramble to meet their annual funding task using all avenues open to them.

Westpac has already confirmed it is looking at the hybrid market.

Big four should remember who backed them in GFC

BY:BILL SHORTEN -  From:The Australian  - February 09, 2012 12:00AM 

AUSTRALIA has some of the best banks in the world. It is partly because of our excellent regulatory system and prudent management. It is partly because the Labor government guaranteed our big banks security during the global financial crisis. But it’s also because Australian banks have traditionally been well served by a smart and committed workforce.

consumer trends for 2012 - AFR 10/2/2012

PUBLISHED: 03 FEB 2012 

How do you top the year of the Arab Spring, the Occupy movement, the explosion of location-based digital applications and the emergence of cyber-addiction? In 2012, the one sure thing is that consumer trends will come and go fast. The world’s population is growing quickly in some parts and ageing rapidly in others. Meanwhile, Apple, Facebook, Google and Amazon slug it out for the future of the innovation economy. What does it all mean? Our panel of leading global trendspotters outlines the themes they believe will shape the near future.

SOCIAL CLIMBING, CONSUMER POWER, CULTURE SHOCKED, DESIGNER FANTASIES, ENTREPRENEURIAL SPIRITS

Macquarie flags 25pc drop in full-year profit AFR 7/2/2012 - insights on investments: derivatives activities plunge, fixed income, currencies and commodities
 
Macquarie chief executive Nicholas Moore said global economic uncertainty had deepened since October 2011, with substantially lower levels of client activity in many markets. Photo: Louise Kennerley

Investment bank Macquarie Group expects its profit to dive 25 per cent to the lowest level posted in eight years, as challenging market conditions forced it to exit some securities activities in offshore jurisdictions.

Students’ start-up one for the books (AFR 7/2/2012)

Zookal founders from left: Ahmed Haider, Rehan Ahmad, Tia Saunders, Luke Saunders and Chris Zaharia. Photo: Nic Walker

The latest generation of start-up founders – including those at textbook rental company Zookal – is savvy. They think nothing of bouncing between competing investment offers to increase their valuation.

Two plucky entrepreneurs from Zookal recently went to lunch with their global competitor and took its offer to tempt another investor to make a higher offer that would quadruple their company’s value.

Zookal was founded at the start of 2011 by five friends, aged 20 to 26, who were studying at the University of Technology, Sydney. They started with 300 books and by second semester they’d turned over enough cash to double the size of their library.

Half-year earnings slump expected - AFR 6/2/2012

Corporate Australia is bracing itself for a seventh consecutive fall in half-year earnings as weak consumer sentiment, the high Australian dollar and deteriorating economic conditions in Europe take their toll.

A flurry of early profit warnings in the new year has priced some of the bad news into share prices but further downgrades are expected.

The last time Australian industrial companies reported half-year earnings growth was in the first half of the 2008 financial year.

“Things will be pretty tough. It reflects the fact that many industrial businesses, from retail to manufacturing and media, are facing both structural and cyclical headwinds,” said Perpetual Investments’ head of equities, Matt Williams.

“On the bright side, balance sheets are in good shape to ride out this period.”

Macquarie Equities is forecasting average earnings per share growth for all listed companies will rise 3.3 per cent for the 2012 fiscal year. However, it warns growth forecasts are strongly skewed to the second half with first-half earnings already tipped to sink 2.9 per cent.

The two-speed local economy will continue to be a theme, although earnings growth for resources companies are expected to ease off record highs. BHP Billiton is this week expected to post first-half underlying earnings of $US10 billion ($9.32 billion), down from last year’s record, while Rio Tinto’s profits are tipped to hit a new high.

The manufacturing, retail and media sectors are expected to be hardest hit as weak consumer sentiment undermines an earnings recovery despite the likelihood of another interest rate cut this week.

While another rate cut could provide a base for a second-half recovery, the big banks are not expected to pass on any cuts in full. Retailers are expected to bear the brunt of weak consumer spending as the fear of job cuts, weak housing prices and global economic woes weigh on sentiment.

The Warehouse Group on Friday became the latest retailer to hose down profit expectations following recent downgrades by surfwear brand Billabong International, JB Hi-Fi and Specialty Fashion Group.

Financial services is seen as another weak spot as the major banks shed jobs and grapple with rising funding costs. Westpac last week announced plans to cut 560 jobs.

Macquarie strategist Tanya Branwhite says she is concerned about a strong uptick in growth expectations by many companies in the second half which could imply further downgrades. “We are entering the seventh half-year [decline] so you get a strong sense about the outlook for our economy,” she says.

UBS analyst Paul Winter expects resources, general industrials and healthcare to be the bright spots.

UBS says there could be potential upside surprises from Primary Health Care, Sonic Healthcare, Flight Centre, Dexus Property Group and AGL Energy. JPMorgan says there is the potential for 27 per cent upside surprises and 38 per cent downside surprises during this report season, which is close to the long-term average.

EPS growth forecasts for listed Australian companies for the 2012 financial year currently average 7 per cent to 8 per cent.

Capital management is expected to be a a major theme, with the possibility of a return to off-market buybacks.

Sweetheart deals: fear of tears - Wealth managers are using sweetheart deals to attract and retain advisers and their funds under management (AFR 6/2/2012)

AMP/AXA says concerns about departures are unfounded. Photo: Tamara Voninski

Wealth managers are using sweetheart deals to attract and retain advisers and their funds under management, despite fears that continued weak markets could put pressure on their balance sheets if a large number decide to take up the terms.

The “buyer of last resort” contracts, under which AMP/AXA, National Australia Bank’s MLC and other major wealth managers offer planners the right to sell their business back to them at a later date, continue to be a key part of their recruitment strategy, according to advisers.

Offers range from 2.75 to three times and 3.5 to 3.8 times annual recurring revenues, depending on the quality of the business and wealth manager.

Weekly radar week finishing Friday 3/2/2012

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An extra 170,000 people call in sick after Australia Day 

Sick of soused? An employer survey has found 31 per cent of business feel the great Aussie tradition of chucking a sickie in going from strength to strength.

More than 170,000 extra people called in sick the day after the recent Australia Day public holiday, illustrating the nation’s high level of absenteeism, according to a large employer group.

Following criticism by Toyota of Australian work culture and the tradition of the “sickie”, the Australian Chamber of Commerce and Industry estimated absenteeism on that day rose from 3 to 5 per cent across the economy.

In the future of globalisation category…: Australian trade push under fire (AFR - 30/1/2012)

source AFR

An Australian plan to revive global free trade talks has been backed by a meeting of influential trade ministers despite strong objections by several developing countries.

Australia has been given the all-clear at a meeting in Davos, Switzerland, to lead moves to get key countries to agree to reduce barriers in the global services markets, even though some countries claim this would be in breach of World Trade Organisation rules.

India, Brazil and South Africa – three of the countries blamed for the statement in the Doha trade round which resulted in negotiations being shelved late last year – issued a joint statement strongly objecting to the Australian-initiated move.

NAB weighs up UK options (2012/01/30)

Source AFR

EDITED BY STEPHEN SHORE AND SARAH THOMPSON

United Kingdom press reports about National Australia Bank’s business on the isle has raised suspicion an exit may be imminent.

Citigroup’s Craig Williams said the “flurry of announcements” gave the impression that there was something “more than usual going on”.

At best, investors could hope NAB may soon exit its troubled UK venture, Williams said. At worst, the publicity was serving as a reminder of the “millstone around the bank’s neck”.