Money Australian banks under pressure as US banks suffer 12 straight days of share price falls
The Sydney suburbs where house prices are set to plunge
New figures have revealed the Sydney regions, including those pictured, where house prices have already fallen by as much as 13.6%.Sydney’s house prices are predicted to fall on average by as much as 10 percent by the end of 2019 as banks clamp down on who they lend money to, according to new figures released by ANZ Research.
It’s not a good time to be invested in US financials. For more than two weeks, investors in that sector have suffered sequential losses, and Australian bank shareholders are looking over their shoulders.
According to Bloomberg, American banks are suffering from what the boffins like to call a ‘flattening yield curve’: essentially margins are being squeezed because the usual difference between lower-cost short-term borrowing and higher-priced long-term lending is smaller than they’ve become used to expecting. And, as Bloomberg notes, the next round of ‘stress tests’ isn’t far away.
Against the grain - Australian banks face rural lending reckoning
Australian potato farmer Tom Fox says he had never missed a bank payment in two decades before a delay sending a shipment to Indonesia during a trade dispute between the countries prompted his lender to force him into receivership in 2013. Australian potato farmer Tom Fox says he had never missed a bank payment in two decades before a delay sending a shipment to Indonesia during a trade dispute between the countries prompted his lender to force him into receivership in 2013.
Australia’s banks know all about the US pain. Only this week, Bank of Queensland Limited (ASX: BOQ) raised rates for most borrowers, citing growing funding costs. The general opinion, including from yours truly, is that rates for borrowers have likely bottomed, even if the RBA keeps its powder dry for the rest of the year.
The reason, as BOQ knows only too well, is that the banks get portions of their funding from depositors like you and I, but also from local and international (mostly the latter) wholesale debt markets. A recent RBA study suggested that 60% of Australian bank funding comes from domestic deposits. The remaining 40% — split between long-term debt, short-term debt, securitisation and equity — is, as if I have to tell you, a very, very large amount of cash.
Alice Springs town councillor set upon by woman holding baby
An Alice Springs town councillor has been set upon by a woman holding a baby after intervening to stop an attack. In a post on Facebook, Ms Price described the incident in which her father first witnessed a woman allegedly being kicked and beaten on the road in the town, near a supermarket, on Saturday night.Ms Price says she went to the scene to help and found another woman in her 50s being attacked. "I managed to grab a hold of her (the attacker) and pulled her to the ground and I wanted to sit on her until police arrived," she told 9NEWS.
And, as if you didn’t know, the US Federal Reserve is in the middle of a pretty aggressive series of rate increases.
The net result is that the proportion of funding that comes from overseas — and the US in particular — gets more expensive, and the banks have a difficult choice: either make less money or pass on those increasing costs to customers. If you haven’t noticed, Australian banks aren’t exactly fond of making less money, so BOQ’s move was unsurprising.
Of course, BOQ isn’t on its Pat Malone when it comes to international funding. And you can bet, almost London-to-a-brick-on, that, despite pressure from the Royal Commission, and the predictable outcries from politicians looking to the next election, that Commonwealth Bank of Australia (ASX: CBA), Australia and New Zealand Banking Group (ASX: ANZ), National Australia Bank Ltd (ASX: NAB) and Westpac Banking Corp (ASX: WBC) will follow. Because the choice between an angry politician and angry dividend-loving shareholders is an easy one!
The next six months will be a test for the banks (and, perhaps, the ACCC). If they’re to avoid the pessimism that’s confronting their US brethren, they’d better hope there’s enough pricing power… and Commissioner Hayne is kind in his report.
Those could be long odds.
'Don't worry, all fine': Thai boys send letters from the cave .
The 12 boys trapped deep inside the Tham Luang cave have asked for fried chicken, not too much homework and, heartbreakingly “to go straight home”.The 12 boys trapped deep inside the Tham Luang cave in northern Thailand have asked for fried chicken, not too much homework and, heartbreakingly “to go straight home” in a series of letters to their parents released on Saturday morning.
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