Morgan Stanley considers Westpac has the worst revenue outlook of the major banks with ongoing AUSTRAC uncertainty the potential for disappointment on costs, downgrading to Underweight from Equal-weight.
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Well, the naming of former ANZ CEO, John McFarlane as the incoming chair of Westpac did nothing for the embattled bank’s share price yesterday.
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Westpac is expected to name former ANZ CEO, John McFarlane as its new chair, to replace Lindsay Maxstead who is leaving the bank in the wake of the multi-billion dollar money-laundering scandal.
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If you exclude the likes of Afterpay Touch, then the financial sector did not help the wider market in 2019.
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The shares of Australia’s big four banks rose strongly yesterday after the Reserve Bank of New Zealand watered down its new capital requirements.
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Another headache for Westpac is in the offing after the key banking regulator, APRA revealed that the bank could face fines and the disqualification of its senior management over the money laundering and terrorism financing law breaches outlined by AUSTRAC.
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The continuing pressure from the AUSTRAC money laundering claims and pressure from regulators has seen Westpac decide to let small investors withdraw orders to buy shares in the $500 million offer to retail investors as part the $2.5 billion capital raising announced earlier this month.
Read MoreWestpac shares ended higher for the first time in five days yesterday in the wake of the dramatic changes at the top of the country’s second-largest bank.
Read MoreWestpac is losing CEO Brian Hartzer, chair Lindsay Maxstead and a long-time director in a cleanout directly linked to the AUSTRAC money laundering and child sex scandals.
Read MoreAnother week ahead, more meetings and more pressure on Westpac, its CEO, Brian Hartzer, chair, Lindsay Maxstead, and other directors after Friday’s emergency board meeting and statement failed to convince investors and critics that the bank has a handle on handling the sensational AUSTRAC money laundering allegations.
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Jamie Nicol, Portfolio Manager for DNR Capital’s Australian Equities High Conviction Fund and SMA, spoke with Informed Investor about the rotation from growth to value.
Read MoreWestpac’s $500 million retail funding raising is now underway and closes on December 1. At a price-earnings ratio of more than 7%, will it prove to be attractive to retail investors?
Read MoreAUSTRAC has launched a civil action against Westpac for systemic non-compliance with anti-money laundering and counter-terrorism financing laws. Morgan Stanley notes investors are aware of the issue but the new allegations could create an overhang for the stock.
Read MoreShocking allegations against Westpac from AUSTRAC the financial intelligence agency, accusing the country’s oldest bank of systematically breaching Australia’s anti-money laundering and counter-terrorism finance laws 23 million times.
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KPMG’s Major Australian Banks Year-End Analysis Report 2018-19 finds that the four majors reported a combined cash profit after tax from continuing operations of $26.9 billion, down 7.8% on FY2018.
Read MoreWestpac’s earnings result fell short of Morgan’s forecast, although adjusting for “transient items” produces a better underlying result. The dividend of 80c, down from a 94c interim, is -4c lower than the broker forecast.
Read MoreNAB shares slid yesterday in the wake of Westpac’s surprise $2.5 billion capital raising and dividend cut as investors said the Melbourne-based lender would be the next major to cut its payout or even approach shareholders for more money.
Read MoreWestpac shares went into a two-day trading halt before the ASX opened on Monday morning to allow it to make a surprise capital raising of around $2.5 billion to big shareholders.
Read MoreWill we see more customer remediation costs on the way for Westpac after a loss in the Federal Court that saw the bank severely criticised and its actions taken to task by the three judges sitting on the appeal?
Read MoreWestpac has announced additional charges for customer remediation and wealth management restructuring. Additional charges reduce Morgan Stanley’s cash profit estimates by -6.5% for the second half and -3.5% overall for FY19.
Read MoreWestpac has joined rivals, NAB and ANZ in revealing more hits to the bottom line for 2018-19 from customer remediation and compensation costs.
Read MoreIn its second and final stability review for 2019, the RBA has warned on a combination of factors that will depress bank earnings, starting with the continuing rise in customer remediation over abuses exposed by the Hayne Royal Commission.
Read MoreThe banking regulator, APRA continues to get tougher with banks and other financial groups it supervises. Yesterday it issued what amounts to a very expensive traffic fine for Westpac.
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The chances of the banks paying higher dividends in the coming years look to have diminished after APRA ordered Westpac, NAB and ANZ to set a total of $1.5 billion in extra capital aside.
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Weaker bank shares helped take the wider market lower for another session, but the day’s loss was nowhere near as damaging as Monday’s 1.2% slump.
Read MoreThe RBA’s second 0.25% rate in two months had a predictable impact on bank share prices – down they went, taking the ASX 200 with them.
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Redemption? Sort of; but the way the share prices of Australian banks rebounded in the June half year was extremely helpful to super funds and self-managed funds and investors generally.
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Scott Kelly, Portfolio Manager for the DNR Capital Australian Equities Income SMA, gives Informed Investor his thoughts about which are the best income stocks on the ASX at the moment.
Read MoreWestpac is having a second go in a few months in overhauling the way it calculates executive pay.
Read MoreANZ and Westpac failed to pass on the full 0.25% cut from the Reserve Bank to its mortgage customers and immediately faced pressure from the central bank.
Read MoreBank shares had a second good day on the ASX yesterday after their post-election surge on Monday. Monday it was Prime Minister Morrison’s surprise win, yesterday it was APRA as the financial prudential regulator revealed plans to relax a key restriction on home loans.
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Some brokers have started to upgrade their recommendations to “BUY” on the banks and believe that they represent value in and around these levels. I still strongly disagree.
Read MoreIt was a messy result, the broker notes, due to accounting changes, but Westpac’s cash earnings and dividend met the broker’s expectation.
Read MoreWestpac has held interim dividend at 94 cents a share despite a 22% slump in cash earnings for the six months to March.
Read MoreAhead of the release next Monday of its 2018-19 interim profit Westpac has surprised the market with an after trading revelation of a $617 million earnings hit from customer compensation charges.
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With three big banks reporting interim results in early May, it will pay investors to look at the first Financial Stability Review of 2019 from the Reserve Bank and remarks on the profits and earnings.
Read MoreWe got a sign of those pressures on the big banks again yesterday when Westpac joined the Commonwealth in cutting interest rates on some of its fixed-rate home mortgages – with some of the cuts aimed directly at the weak investor sector.
Read MoreThe bank has announced that first half cash earnings will be reduced by around -$260m amid further customer remediation. This remediation does not include aligned dealer group fee-for-no-service, which is still to come.
Read MoreWestpac has leaked some more red ink out into the market warning that H1 profit will take a $260 million hit from refunding customers in its financial advice, consumer and business banking arms.
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