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BFCSA investigates fraud involving lenders, spruikers and financial planners worldwide.  Full Doc, Low Doc, No Doc loans, Lines of Credit and Buffer loans appear to be normal profit making financial products, however, these loans are set to implode within seven years.  For the past two decades, Ms Brailey, President of BFCSA (Inc), has been a tireless campaigner, championing the cause of older and low income people around the Globe who have fallen victim to banking and finance scams.  She has found that people of all ages are being targeted by Bankers offering faulty lending products. BFCSA warn that anyone who has signed up for one of these financial products, is in grave danger of losing their home.


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BFCSA: CBA’s result does little to lift banking gloom

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CBA’s result does little to lift banking gloom

The Australian 12:00am May 14, 2019

Richard Gluyas


As the curtain falls on the major bank profit-reporting season, there’s very little — if anything — for investors to celebrate.

Even with last year’s hike in variable mortgage rates, every line of revenue is under pressure.

Remediation and compliance costs continue to mushroom, and after eight years of the most benign credit conditions imaginable, the credit cycle has ominously started to turn.

Commonwealth Bank’s third-quarter trading update failed to pierce the gloom.

Cash profit for the three months to March was $1.7 billion, down 9 per cent or 28 per cent after notable items.

The 4 per cent decline in group revenue reflected a 10 per cent slump in non-interest income after the adoption of more customer-friendly fee structures ($30 million cost), an unfavourable derivative valuation adjustment ($50m) and adverse weather events ($30m).

Interest income would have been flat but for a $100m hit from two less trading days.

Just as concerning was the $714m pre-tax blowout in remediation provisions, taking the group total to $2.2bn.

While CBA believes it has now set aside enough provisions to cover all “known” banking and wealth exposures, it would be foolish to think that all gremlins have been neutralised.

The biggest indicator of future problems, however, is the $500m spike in troubled and impaired assets from $6.7bn at the end of last year to $7.2bn.

About $400m of the increase came from single-name corporate exposures, the impact of the drought and tough times in discretionary retail, with consumer arrears accounting for the remainder.

The latter reflected hardship among home loan customers due to low wages growth and cost of living challenges, particularly in outer-metropolitan Sydney, Melbourne and Perth.

Industry wide, the response to these pressures has been to pull down hard on the costs lever.

A report in this newspaper last month says CBA was looking to slash its 50,000-strong global workforce by at least 10,000, as well as put the shutters on about 200 branches of a total network of more than 1000.

Financial Sector Union national secretary Julia Angrisano lodged a dispute with the Fair Work Commission, arguing that the workplace agreement with CBA required consultation about change — earlier than an actual management decision. The hearing is scheduled for tomorrow.

CBA chief executive Matt Comyn told The Australian he would meet with Angrisano next week over the union’s concerns.

In the meantime, he says more than 4000 jobs would go off CBA’s books as a result of divested businesses. Hundreds of staff had also been temporarily allocated to remediation programs.

Comyn says the suggested number of departures was news to him, as was the claimed extent of branch closures, even with the rapid adoption of digital banking.

Downsizing and cuts to the network had been “modest” in recent years and there was no current intention to amp things up.

The message is to watch this space.

Rate cut prospects

Analysis shows the major banks tend to outperform as speculation takes over in the lead-up to a Reserve Bank rate cut, and then underperform in the months after the cut actually occurs.

That was the experience in April, when expectations grew that governor Philip Lowe would pull the rate trigger after a long hiatus at the RBA’s board meeting in May as the economy slowed.

The question now is whether a similar run-up in share prices will occur ahead of what the market is punting will be an August easing in official rates.

Morgan Stanley thinks not, essentially because the adjustment has already occurred and lightning won’t strike twice.

Its analysis of relative total shareholder returns is that the major banks outperformed the market by 1.6 per cent in the three-month lead-up to the 2013, 2015 and 2016 rate cuts by the RBA, and by 1.3 per cent over one month.

After the rate cuts, the banks underperformed by 0.9 per cent over one month and by 2.7 per cent over three months.

Lowe said in last week’s decision to keep rates on hold that the labour market remained strong.

In making its final decision on rates, Lowe says there was still spare capacity in the economy and that a further improvement in the labour market was needed for inflation to be consistent with the target range of 2-3 per cent.

“Given this assessment, the board will be paying close attention to developments in the labour market at its upcoming meetings,” he says.

The RBA is clearly highly sensitised to any deterioration in the labour market, leading to Morgan Stanley now punting on a rate cut in August. It reckons that every 25 basis point cut in rates leads to a 2-3 basis point erosion in major-bank profit margins, and a 1.5-2.5 per cent fall in earnings.

Given the hostile political environment, it expects the banks to probably reprice by only 10-15 basis points to offset the margin decline. RBA rate cuts are therefore likely to put further downward pressure on margins.



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