More than A$70 billion on issue from 37 banks revised by S&P

Wednesday, 30 November 2011 09:02
The 37 international banks which had their Standard & Poor’s (S&P) ratings revised on November 29 – predominantly for the worse – in line with the agency’s new criteria have more than A$70 billion (US$70.2 billion) on issue in Kangaroo and domestic Australian format according to KangaNews data. They also have more than NZ$2.5 billion (US$1.9 billion) outstanding Kauri and New Zealand domestic bonds.

Among the 37 banks very few of the borrowers active in Australia and New Zealand escaped unscathed, with many of the biggest-issuing names seeing their ratings downgraded by one or two full notches (see table following story).

Australia’s banks were not included in the first clutch of firms to have their ratings reviewed in light of S&P’s new criteria. Market sources believe an announcement on the Australian names is likely to follow in the next week or two – and possibly by December 1 – with the consensus analyst view being that the most likely outcome is a stable single-notch downgrade for the big four from their current level of AA.

However, strategists have suggested the best-case scenario – the Australian majors retaining their AA ratings with a likely outlook revision to negative from stable – is rather less likely than either a downgrade to A+ stable or AA- negative.

Banks face home loan suit
Chris Vedelago
January 15, 2012

AUSTRALIA'S banks could be facing a massive new class action over allegations that their mortgage lending practices have put thousands of families in severe financial stress or at risk of losing their homes.

Organisers estimate that up to 300,000 mortgage holders would be eligible to participate in the action, which is expected to focus on first home buyers and lower-income households who received loans since the onset of the global financial crisis.

The proposed lawsuit has drawn qualified support from law firm Maurice Blackburn, which is already engaged in the country's largest class action over alleged fee gouging by the big banks.

Read more: http://www.theage.com.au/business/banks ... z1jTbif3TN

Judd wrote:This country is becoming stuffed.

Banks face home loan suit
Organisers .... from law firm Maurice Blackburn,

robert garden wrote:not a bad idea if some of the young turks needed to have 20% deposit and a saving program before they get a home loan ....instead of getting their SUV and BOAT and MOTOR BIKE and all the other trinkets first ..
Then they want a 100% homeloan ...before they snatch the baby bonus and fill the house with 2 year interest free chattels

Very sad and this is what Aust encourages ....Feral

<GS> Retaining a Neutral rating on banks

We retain a Neutral rating on the banks Coverage Group given the following factors:
1. ROE and earnings momentum neutral: Whilst we see near term earnings pressure for the sector plus consensus expectations heading into 1H12/ 1Q12 results, offsets are available from tighter cost management and repricing efforts. As such, we think banks can sustain ROEs in the mid/high teens.
2. Negative news catalysts: as 1Q12E and 1H12E results deliver cautionary commentary around near term earnings growth.
3. Positive industry structure: with continued reduction in competition from offshore and non-bank players aiding any asset repricing efforts.
4. Positive valuation metrics: with the sector trading on a 1 year forward PER of 10.4x a 16% discount to 10 year average and 1 year forward P/BV range of 1.3x – 2.1x versus ROE of 15.5% - 18.5%.

CBA least preferred amongst the majors
Our sector preference amongst the major banks remains NAB, ANZ, WBC followed by CBA.
- CBA remains our least preferred given (1) expensive valuation, (2) risks to consensus earnings expectations and (3) strategic uncertainty with the new CEO. From a valuation perspective, CBA is trading on an FY12 PER of 12.0x, a 25% premium to major bank peers, and offers the lowest dividend yield of the major banks at only 6.5%.

- NAB and ANZ remain our preferred major bank exposures given (1) superior franchise momentum, (2) undemanding valuations and (3) potential upside to returns longer-term from NAB’s exposure to a recovery in business lending and ANZ’s Institutional build-out.
BOQ preferred over BEN amongst the regionals

- Looking at regional banks relative to their major bank peers, we see near term risk given their industry positions implies greater downside risk from funding market dislocation and deposit competition. In addition, we would expect the regional banks to be more heavily impacted by the impending change to the deposit guarantee scheme. Our Sell rating on BEN is supported by this cautious earnings outlook for regionals vs major bank peers.
That said, we retain our Buy recommendation on BOQ for stock-specific reasons.

Banks' could pull back on home loans
Gareth Hutchens
February 7, 2012

BANKS could become more cautious on lending to new home owners after making losses on mortgages written over the past four months, according to the latest banking industry research.

As the Reserve Bank considers whether to cut rates today, a report from UBS Securities said higher wholesale funding costs and intense competition to write new home loans had left Australia's banks facing a ''dangerous situation'', with little incentive to offer new mortgages.

This followed a warning from Moody's rating agency that Australia's banking system was ''most vulnerable'' to financial and economic shocks from the euro-area crisis.
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Economists widely tip the RBA to cut rates by a quarter percentage point today after retail sales figures yesterday showed trade grew at its slowest pace in 50 years in December, despite interest rate cuts in November and December. [Well, you got THAT one wrong, chaps - Judd]

Jonathan Mott, a banking analyst from UBS and author of the report, said banks would be left with a difficult choice if the RBA did cut rates today: they could pass on the full RBA cut in the hope of wholesale funding markets improving; they could reprice the interest rate on new mortgages above the official cash rate; or they could stop writing new mortgages.

Read more: http://www.theage.com.au/money/borrowin ... z1lfK8AHlj