|Bid||80.41 x 0|
|Ask||80.43 x 0|
|Day's Range||80.20 - 80.69|
|52 Week Range||67.55 - 83.99|
|Beta (5Y Monthly)||0.50|
|PE Ratio (TTM)||17.15|
|Earnings Date||Feb 12, 2020|
|Forward Dividend & Yield||4.62 (5.80%)|
|1y Target Est||73.17|
Moody's Investors Service has assigned definitive ratings to the notes issued by Perpetual Corporate Trust Limited in its capacity as the trustee of the Flexi ABS Trust 2019-2. Please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.
(Bloomberg Opinion) -- For decades now, Australian banks have been a class apart.Thanks to a ceaselessly growing economy, an oligopolistic structure that prevents mergers between the big four lenders, and the loyalty of self-funded retirees who play a large part in the local stock market, they’ve been valued as if they’re in a fundamentally different business from counterparts in other countries.At their peaks, Commonwealth Bank of Australia, Westpac Banking Corp. and Australia & New Zealand Banking Group Ltd. were all priced at more than three times book value. That’s extraordinary in an industry where the share price should tend to cleave fairly close to the value of net assets, and where the median valuation among large banks in developed markets is 0.77 times book.(1)Tuesday’s announcement that Westpac Chief Executive Officer Brian Hartzer has resigned after the company was accused of 23 million separate breaches of money-laundering regulations should be a wake-up call. While valuations have slipped in recent years thanks to a teetering housing market and a government inquiry into the sector, Australia’s banks still have further to fall.If you look at them in terms of return on equity, the big four are distinctly middle-of-the-road. All are around the median deciles relative to their peers in other countries except for Commonwealth Bank, with National Australia Bank Ltd. somewhat below the midpoint. Switch to price-book measures, though, and they’re close to the top of the pack, with the Commonwealth at number three in the world.The best explanation for this is probably their reputation as excellent dividend payers. Given the vast uncertainties around bank earnings due to regulatory requirements and the fuzziness of working capital and capital expenditures, dividends are often regarded as the most solid basis for a real understanding of a bank’s future cashflows. Given that shareholders are ultimately paying for a right to a slice of those cashflows, it’s natural that banks with above-average dividend yields should have above-average valuations, too.Australia is relatively exceptional on that front. All of the big four barring the Commonwealth are in the second-highest decile among their peers in terms of analysts’ estimates for blended-forward 12-month dividend yields. Combined with the fact that Australia’s army of affluent retirees show an unusual loyalty to household-name blue-chip companies that pay a reliable income stream of shareholder returns, it’s little wonder the sector is outperforming.There’s a problem on the horizon, though. As Bloomberg News’s Emily Cadman has written, the dividend party could be coming to a close. Payouts have already been reduced at Westpac and National Australia Bank, and ANZ has cut the amount eligible for tax refunds, as the big banks have been forced to set aside more capital by the regulator.Such balance sheet reinforcement should at least be a temporary measure, but even once they’re paid there are further risks to cashflows. Australia’s economy is slowing, as my colleague Daniel Moss has written.Interest rates, as measured by three-month interbank benchmarks, look closer to those in the U.K. than the country’s bank valuation peers in the U.S. and Canada. That’s likely to have a rough knock-on effect on earnings, given the tight relationship between borrowing costs and net interest margins, a key determinant of bank profits.Even if the current rebound in the housing market translates into a more sustained upswing, there are challenges. Any banks wanting to take advantage of that by lending more aggressively are going to need to find a way to attract more deposits, which will put further pressure on interest margins given the low rate environment.All of that should serve to reduce the reliability of those dividend payouts — and without that, Australia’s retirees may find there are other blue-chip businesses worthy of investment.Westpac shares have reacted positively to the news of the clean-out at the top of the bank, but don’t expect the big four to find recovery from their malaise easy. Australia’s banks have been cash machines while the economy prospered. As it struggles to relight the fire that powered it for the past three decades, that money could be drying up, too. (1) We've confined our universe to banks with more than $100 billion in assets in North America, Western Europe and developed Asia-Pacific markets.To contact the author of this story: David Fickling at firstname.lastname@example.orgTo contact the editor responsible for this story: Matthew Brooker at email@example.comThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.David Fickling is a Bloomberg Opinion columnist covering commodities, as well as industrial and consumer companies. He has been a reporter for Bloomberg News, Dow Jones, the Wall Street Journal, the Financial Times and the Guardian.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
(Bloomberg Opinion) -- After a 14-month inquiry that resulted in the departures of two chief executive officers and two chairmen, you might think Australia’s financial services industry would have cleaned up its act. The anti-money-laundering agency just provided 23 million reasons why you’d be wrong.Austrac applied Wednesday for civil penalties against Westpac Banking Corp., the country’s second-biggest lender, for allegedly contravening laws on money-laundering and terrorism financing 23 million times. Most concerning was the agency’s claim that Westpac failed to do due diligence on 12 customers whose transaction activity was “indicative of child exploitation risks.”“Some of the undetected transactions involved payments to alleged or suspected child exploitation facilitators,” Austrac wrote in a summarized statement of claim. “One customer opened a number of Westpac accounts after serving a custodial sentence for child exploitation offences.”Such a pattern of alleged lapses is extraordinary. It’s more than two years since Westpac’s larger rival, Commonwealth Bank of Australia, faced a similar money-laundering case from Austrac, and the entire banking sector was in the dock for the duration of the Hayne Royal Commission, the government inquiry into the finance industry that finally wrapped up in February.Westpac came out of that inquiry with only a qualified pass. The tardiness in shedding its wealth business drew criticism, due to the potential for conflicts of interest. While Chief Executive Officer Brian Hartzer didn’t come in for the stinging censure that led to the departure of National Australia Bank Ltd.’s chairman and chief executive, Commissioner Kenneth Hayne was notably skeptical about whether he’d really turned over a new leaf.The long boom in the Australian economy has led executives to ignore what retail banking is meant to be about. Every bank wants to make life easy and friction-free for customers, but it’s precisely the friction embodied in know-your-customer and anti-money-laundering regulations that stops banks becoming conduits for illicit cash.Commonwealth Bank’s problems with Austrac stemmed from the introduction of deposit-taking ATMs that were wide open to abuse by money-launderers. In Westpac’s case, its LitePay international payment service appears to have played a similar role. Senior management were briefed on risks from payments to the Philippines and Southeast Asia over LitePay in June 2016, according to Austrac, but only got around to implementing an automated system to spot transactions connected with child exploitation two years later. To this day, some non-LitePay payment channels still lack such automated detection systems, according to Austrac.Identifying and preventing the funding of child exploitation should be among the most basic tasks of major banks. As anyone who’s been unable to withdraw cash at an overseas ATM knows, automated screening is capable of picking up abnormal activity in the smallest amounts. It’s astonishing that, at a time when the behavior of Australia’s banking sector was under unprecedented scrutiny, Westpac should have failed to implement controls on transactions with high-risk correspondent banks and do proper child exploitation due diligence on its own customers.Westpac is already suffering. Earlier this month it announced a A$2.5 billion ($1.7 billion) capital raising and cut its dividend after its key profit measure fell 15%. Despite a surprising pickup in house prices in recent months, the buy-to-let investors who have driven the market for years are showing little demand for new mortgage credit, crimping the bank’s most important business. Its price-to-book ratio isn’t quite as low as it was a year ago when the Hayne inquiry was approaching its climax, but it’s closing in on those levels.Former Commonwealth Bank Chief Executive Ian Narev announced his departure less than two weeks after news of that bank’s Austrac scandal broke in 2017, and his successor Matt Comyn has spent most of the past two years in an extended and radical cleanup. To remain in the top job at Westpac, Hartzer will have to persuade shareholders and directors that a similar change of heart is finally under way. To contact the author of this story: David Fickling at firstname.lastname@example.orgTo contact the editor responsible for this story: Matthew Brooker at email@example.comThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.David Fickling is a Bloomberg Opinion columnist covering commodities, as well as industrial and consumer companies. He has been a reporter for Bloomberg News, Dow Jones, the Wall Street Journal, the Financial Times and the Guardian.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
(Bloomberg) -- Explore what’s moving the global economy in the new season of the Stephanomics podcast. Subscribe via Apple Podcast, Spotify or Pocket Cast.Australia’s central bank considered cutting interest rates at its latest meeting, but decided instead to hold steady and monitor the impact of earlier easing amid concern that households were being spooked by very low borrowing costs.In minutes of its Nov. 5 meeting released Tuesday in Sydney, the Reserve Bank said the board recognized the “negative effects” of lower rates on savers and sentiment. It kept the cash rate unchanged at a record-low 0.75%.“A case could be made to ease monetary policy at this meeting,” the RBA said. The board “also discussed the possibility that a further reduction in interest rates could have a different effect on confidence than in the past.”The central bank has cut rates three times since June as it tries to spur hiring and investment to accelerate growth in an economy that has slowed sharply in the past 12 months. Yet so far, only the housing market has responded as usual to lower rates, with consumption remaining tepid and confidence weak.Still, the cuts have allowed the board to keep a lid on the currency at a time when the Federal Reserve was easing -- both the RBA and Fed lowered rates by 75 basis points this year. The U.S. has since signaled that it’s on hold, giving RBA Governor Philip Lowe some breathing room on when to deploy his remaining conventional ammunition.The Australian dollar declined after the release, trading at 67.90 U.S. cents at 12:20 p.m. in Sydney, from 68.06 cents just before the minutes were published.“Global financial markets were signaling a decline in pessimism, which, if sustained could lead to better-than-expected outcomes for the global economy,” the RBA said. It decided “the most appropriate approach would be to maintain the current stance of monetary policy and to make another full assessment once more evidence of the effects of the earlier monetary easing had become available.”Weak Wages, JobsSince the meeting, salary and employment data have both come in weaker, with wages rising an annual 2.2% and unemployment climbing to 5.3% as the economy shed jobs for the first time in over a year. The RBA is trying to return inflation to its 2%-3% target and needs the jobless rate to fall to spur wage gains and push up consumer prices.“It appears that the ‘on hold’ decision was not made lightly,” said Gareth Aird, senior economist at Commonwealth Bank of Australia, which forecasts a cut next February. “We view this new information and its inclusion in today’s minutes as a dovish tilt.”Traders are pricing in a chance of another quarter-percentage-point cut in the first half of next year that would take the cash rate to 0.5%. Lowe has said the lower bound of policy is probably around 0.25%-0.5%, suggesting that another cut could open the door to unorthodox policy measures.The central bank reiterated Tuesday that “it was reasonable to expect that an extended period of low interest rates would be required in Australia to reach full employment and achieve the inflation target.” The bank also repeated it was prepared to ease policy further if needed.Lowe has been pressing the government to lift spending to bring fiscal policy in line with monetary policy. But the government has so far resisted as it aims to return the budget to surplus.The RBA forecast “moderate” economic growth for the third quarter that ended in September. Spare capacity is likely to remain in the labor market “for some years,” it said.(Updates with comment from economist in ninth paragraph.)To contact the reporter on this story: Michael Heath in Sydney at firstname.lastname@example.orgTo contact the editors responsible for this story: Nasreen Seria at email@example.com, Victoria BatchelorFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
Australia's Commonwealth Bank is planning to sell A$1 billion ($687.20 million) worth of residential mortgage bonds in the country's first public deal that will not use the local LIBOR-equivalent benchmark, the bank bill swap (BBSW) rate. Bond coupons, or interest rates around world financial markets are priced relative to surveyed inter-bank lending rates such as the London Interbank Offered Rate (Libor), a benchmark embedded in as much as $340 trillion financial contracts worldwide. The Australian corporate regulator in 2014 implemented changes to the BBSW methodology that require it to be based on actual transactions and not a survey.
Moody's Investors Service has assigned provisional ratings to the notes to be issued by Perpetual Corporate Trust Limited in its capacity as the trustee of the Flexi ABS Trust 2019-2. "IMPORTANT NOTICE: MOODY'S RATINGS AND PUBLICATIONS ARE NOT INTENDED FOR USE BY RETAIL INVESTORS.
Moody's Investors Service ("Moody's") has completed a periodic review of the ratings of Commonwealth Bank of Australia and other ratings that are associated with the same analytical unit. "IMPORTANT NOTICE: MOODY'S RATINGS AND PUBLICATIONS ARE NOT INTENDED FOR USE BY RETAIL INVESTORS. This publication does not announce a credit rating action and is not an indication of whether or not a credit rating action is likely in the near future.
(Bloomberg) -- Swedish payments and banking firm Klarna became the most valuable European fintech startup after new funding pushed its post-money valuation to $5.5 billion.Klarna reached that status after raising $460 million in an equity round that will help it “continue its rapid rise in the U.S. market where it is currently growing an annual rate of six million new U.S. consumers,” the company said in a statement on Tuesday.With its new funding, the Stockholm-based startup leapfrogs European fintech darlings TransferWise and N26, which have recently been valued at $3.5 billion.Klarna helps online shoppers arrange financing at points of purchase, as well as provide merchants with payment tools. It challenges companies such as PayPal Holdings Inc., Square Inc. and Adyen NV, each of which has their own twist on facilitating commerce between sellers and shoppers.Dragoneer Investment Group led the raise, according to the statement. Other participants included the Commonwealth Bank of Australia, HMI Capital LLC, Merian Chrysalis Investment Co. and Sweden’s AP1 state pension fund, as well as accounts managed by BlackRock Inc. These additional investments follow the January announcement that the rapper known as Snoop Dogg had invested in the Swedish firm.Numis acted as exclusive financial adviser and placement agent to Klarna.To contact the reporters on this story: Ali Ingersoll in London at firstname.lastname@example.org;Niklas Magnusson in Stockholm at email@example.comTo contact the editors responsible for this story: Giles Turner at firstname.lastname@example.org, Nate Lanxon, Molly SchuetzFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
SYDNEY/BENGALURU (Reuters) - Australia's three biggest banks said they will test a new bank-guarantee platform for shopkeepers that uses a shared database, claiming the project would mark the world's first use of blockchain technology to process retail financing. Commonwealth Bank of Australia, Westpac Banking Corp and Australia and New Zealand Banking Group Ltd are teaming up with local Westfield mall owner Scentre Group to test the use of IBM software to process financing contracts on the same network. The banks running the trial believe switching to blockchain could cut processing time to a day from a month and reduce the risk of fraud.
SYDNEY/BENGALURU, July 4 (Reuters) - Australia's three biggest banks said they will test a new bank-guarantee platform for shopkeepers that uses a shared database, claiming the project would mark the world's first use of blockchain technology to process retail financing. Commonwealth Bank of Australia, Westpac Banking Corp and Australia and New Zealand Banking Group Ltd are teaming up with local Westfield mall owner Scentre Group to test the use of IBM software to process financing contracts on the same network.
Australia's central bank cut rates to a record low on Tuesday and signalled willingness to go further as a worsening Sino-U.S. trade war raises recession risks for the world economy, pushing policymakers into what could be a global monetary easing cycle. RBA Governor Philip Lowe said the rate cut was designed to support employment growth and lift inflation, which has consistently undershot its 2%-to-3% medium-term target. "It is possible that the current policy settings will be enough – that we just need to be patient.