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Tuesday, 5-Nov-2013 06:22 Email | Share | Bookmark
Small Lenders Take Initiative On Rates

Westpac in record profit; Australia banks set for bumper 2014

Ms Hutchison believes other lenders have room to move. On average they have kept 42 basis points of the Reserve Bank of Australia's (RBA) 175 basis points of official rate cuts since November 2011 from variable home loan borrowers. "If these three lenders can afford to cut variable rates out of cycle, other lenders - including the major banks - have no excuse to sit on their hands," she said. RBA governor Glenn Stevens will likely be quizzed on the cost of funds for banks and how that fits in with monetary policy when he faces federal MPs in Canberra on Friday. In its most recent statements, the central bank has indicated it stands ready to cut the cash rate again if needed given the benign inflation outlook. New data on the Thursday bucked the trend of subdued pressures, indicating that the average wage jumped five per cent in the year to November for an annual salary of $72,592. This is well above the RBA's four to 4.5 per cent line in the sand for wages growth, and more than double the inflation rate of 2.2 per cent as of December last year. However, the composition of this data set tends to make it volatile, which is why the RBA prefers to use the wage price index as one of its main guides to wages growth. That index, released on Wednesday, showed annual wage growth at a more contained 3.4 moved here per cent. <br>For the original version including any supplementary images or video, visit

Bank wars: whats in it for small business? Great news for the average consumer but whats in it for small business? With whispers that the onslaught has only just begun, this space could soon get very interesting. So far, unless you are refinancing your home loan, the benefit is not obvious, but Westpac has already indicated its out to woo business customers and, as confidence increases, is looking to amp up the competition for business credit and business loans. There is a link between home loans and business transaction accounts, however. Business people tend to keep the same provider for both home loan and business transaction accounts so the NAB grab at the home loan market is also an indirect grab for the business customer. As things pick up for business small business owners are less likely to self fund any cashflow shortfalls from their mortgage, instead opting for a line of business credit, overdraw facility on their business account, or business loan. <br>For the original version including any supplementary images or video, visit

ANZ lifts home loan, small business rates

Figures like these have fuelled talk of a housing bubble but the central bank has called such talk "unrealistically alarmist". Among the banks, National Australia Bank is expected to show the strongest jump in cash earnings in the current financial year - some 5.1 percent to A$6.2 billion, according to an average of three analysts' projections. ANZ is expected to log a 4.6 percent climb to A$6.8 billion, while Westpac's cash earnings are expected to rise 4.2 percent to A$7.4 billion. Commonwealth Bank, Australia's biggest bank by market value, is expected to post A$8.1 billion in full-year 2014 cash earnings, up 3.6 percent. On Wednesday, it may report first-quarter cash profit of around A$2.15 billion, up from A$1.85 billion from a year earlier, according to Morningstar's Ellis. Among the banks, ANZ with its focus on Asia, will be closely watched. With its "super-regional" strategy, ANZ is seeking to position itself as a pan-Asian player like HSBC Holdings Plc and Standard Chartered Plc , aiming to bring in between 25 and 30 percent of earnings from Asia-Pacific, Europe and America by 2017, up from 21.4 percent in its 2013 financial year. Westpac's shares closed 1.2 percent lower after its earnings, while the broader market was down 0.4 percent. <br>For the original version including any supplementary images or video, visit

Bank wars: what’s in it for small business?

"The funding environment changed quite dramatically in late 2011 as a result of the economic and financial crisis in Europe," the head of ANZ's Australian operations Philip Chronican said. "This has seen wholesale funding costs rise and competition increase dramatically among banks for deposits. "We accept our response to the new funding environment is difficult for some of our customers - even though deposit customers have benefited from better rates. "Given this and the volatility we have seen in wholesale funding markets, we wanted to ensure these costs were sustained before we acted to pass them on. "We also wanted to pace increases in a way that was manageable for our customers and ensured we were competitively positioned." The RBA cut the cash rate in November and December last year, but retail banks independently increased their lending rates in February due to their increased funding costs. ANZ decided to leave its variable rates unchanged in March but raised a raft of fixed-interest mortgage product. The bank's chief executive Mike Smith warned in February further interest rate rises were on the cards, despite ANZ reaping a $1.48 billion first quarter profit. <br>For the original version including any supplementary images or video, visit

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