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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: Westpac to continue bank profit pain and growing bill for customer refunds

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Westpac to continue bank profit pain

Australian Financial Review May 6, 2019 12.00am

Lucas Baird


Westpac won't cut its interim dividend despite a growing bill for customer refunds, but investors and analysts will be looking anxiously at half-year results on Monday for signs of further pressure on the bank's local revenue and earnings.

Westpac's interim profit will follow on from ANZ and NAB last week, which showed that the slowing housing market was weighing heavily on the profitability of their Australian operations.

Analysts are expecting Westpac will report a cash profit of about $3.3 billion for the six months to March 31, which would represent a fall of 22 per cent on forecasts from Macquarie Research. Last week the financial services giant announced it would set aside $753 million to refund customers and to restructure its wealth division in the wake of the banking royal commission.

Morningstar analyst David Ellis said post-royal commission remediation has become a defining issue for Australa's big banks.

"There isn't much separating the big four," Mr Ellis said. "The 2019 financial year, for pretty much all the major banks, will see earnings impacted by these big remediation bills."

Last week, acting NAB chief executive Phil Chronican said that, as of the end of March, his bank had provided $1.1 billion for customer refunds. This was partly behind the bank's decision to cut its dividend from 99¢ per share to 84¢.

ANZ has set aside $927 million for remediation since the second half of the 2017 financial year, but was able to keep its interim dividend steady at 80¢ last week after announcing a more modest $175 million increase to its refund bill for the March half.

Stronger capital

Mr Ellis said that despite growing remediation costs he expected Westpac's dividend to remain steady at 94¢ per share.

"They're in a stronger capital position than NAB, and that's one of the reasons I don't think Westpac will cut the payment," he said.

When NAB opted to cut its investor dividend, commentators attributed the decision to its tier 1 capital position – the core measure of a bank's financial strength – which needed to improve in light of new regulatory requirements.

But Mr Ellis expects that Westpac's CET1 position will be more in line with the regulator's expectations, at about 10.6 per cent, when the bank reports on Monday.

Mr Ellis' view on the dividend is in line with those of other analysts. UBS said Westpac would leave its dividend at 94¢ per share in an update last month, and this view is echoed by Citi and Macquarie.

The weakness in the housing market will also be closely watched in Westpac's results, with Mr Ellis predicting home loan arrears would rise. "There's increasing risk for banks in the housing market ... housing credit is slowing."

But he said the increase in arrears was coming from a low base and shouldn't cause significant concern.

Mr Ellis expects Westpac's loan growth will stand at 3 per cent, its net interest margin (the difference between the rate it can lend money out, and the rate it charges depositors) will be just over 2 per cent, and its bad debt loss rate to rise by between 13 basis points and 14 basis points.

"Westpac remains [Morningstar's] preferred major bank," he said.

The investor perspective

Alphinity portfolio manager Andrew Martin declared he "would be surprised if there was anything materially different between Westpac, ANZ, and NAB" on Monday.

"We'll see a lot more of the same trends," Mr Martin said. "They will be talking about their costs, the royal commission, and their capital position."

The pain the major banks were failing in the aftermath of the royal commission had made it difficult for investors to get excited about the banking sector, he said.

"None of the banks look decent."

But Mr Martin argued that if Westpac's results remained business as usual on Monday, NAB and ANZ were the better options for investors.

He argued that uncertainties in the housing market had equalled the higher level of risk that was traditionally associated with commercial lending, and this left NAB and ANZ – which have less exposure to mortgages, and more exposure to business lending than Westpac and Commonwealth Bank – in relatively good positions.

"NAB and ANZ's don't have the largest exposure to the residential mortgage market, which is the hardest part of banking at the moment," he said. "Obviously they all have significant retail banks but theirs are proportionally smaller than CBA and Westpac's."

Moreover, when combined with the cost-cutting exercises both ANZ and NAB had undergone through automation, Mr Martin said they were the clear top picks in the sector.

Commonwealth Bank will reveal its third-quarter numbers on May 13. Morgan Stanley has tipped a 1 per cent decline in continuing cash profit, to about $2.3 billion.


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