Lending Central

photo credit: Andres RuedaAustralian remains a cash-based society but the use of plastic credit and debit cards is growing as consumers seek more convenient payment methods and loyalty or reward program benefits, new central bank research shows.

A Reserve Bank of Australia (RBA) study of consumer payment behaviour released on Wednesday found cash is still king, accounting for 70 per cent of all transactions.

EFTPOS and MasterCard and Visa debit card payments make up 15 per cent of all transactions, followed by MasterCard and Visa credit card transactions at nine per cent and American Express and Diners Club cards at one per cent.
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Litigation over Bank of Queensland’s (BOQ) involvement with the failed financier Storm Financial could substantially eat into the bank’s profit just as losses from bad debts peak.

BOQ revealed last Thursday it had a total lending exposure of $105 million from 319 Storm Financial clients - $20 million more than the bank’s interim 2009 cash profit.

However, BOQ has said the majority of the customers were repaying their loans and no margin loans were provided to Storm customers.

BOQ was caught off guard last week when the Australian Securities and Investments Commission (ASIC) placed the bank under investigation for matters relating to Storm one day after BOQ issued a denial over a regulatory probe.
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Australian superannuation funds will return their biggest losses since the introduction of compulsory super 17 years ago, researchers say.

“2008/09 will go down as the worst financial year for super fund investors since the introduction of compulsory super in July 1992,” SuperRatings managing director Jeff Bresnahan said.

“The global financial crisis has now been the catalyst for two consecutive poor results from our super funds.”

SuperRatings, an independent research group, said it expected medium balanced investment funds to post a loss of 13 per cent for 2009/10 financial year.
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One in five homeowners would consider renting out a spare room to help pay the mortgage in increasingly difficult economic times, a new survey has found.

The poll by real estate agency PRDnationwide also found 14 per cent of respondents already had someone renting a room and another 15 per cent would do so if they had the space.

PRDnationwide research director Jonathan Rivera said the results were not surprising given the present economic climate.

“Having someone contributing $100 a week to rent a spare room could be the difference of struggling with bills or not,” he said.
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The Australian Office of Financial Management (AOFM) will offer $900 million of short-dated Treasury notes in two tranches at a tender on Thursday July 2.

The issue comprises $600 million of notes maturing on October 23, 2009 and $300 million of notes maturing on January 22, 2010.

The RBA said it would not take up any of the offer.
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Banker and insurer Suncorp-Metway Ltd has announced financial services executive Patrick Snowball as its new chief executive officer.

Mr Snowball was chairman and deputy chairman with the Towergate group of companies for the past two years, and was a member of the executive team at Aviva plc, the world’s fifth largest insurance group, for 19 years from 1988.

“I am delighted to announce the appointment of an outstanding leader with extensive financial services experience and who has overseen businesses with operations in the United Kingdom, Ireland, Canada, India and Asia,” Suncorp chairman John Story said in a statement.

The appointment follows an “exhaustive” national and international search, Mr Story said.
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A range of new tax relief measures come into play from Wednesday, which will further help business and jobs in the face of the global recession, Treasurer Wayne Swan says.

Income tax cuts, refunds for education expenses and increased child care benefits form part of a new wave of stimulus for the economy, and come on top of the one-off welfare and tax bonuses dished out this year.

“These payments have overwhelmingly benefited low and middle-income Australians and have been very effective in supporting business activity, limiting job losses and keeping Australia from falling into technical recession,” Mr Swan said in a statement.
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ABC Learning founder Eddy Groves has agreed to have his assets frozen, while denying most of his property is actually in a company in his new wife’s name.

His wife, Viryan Collins-Rubie, is the sole director of the discretionary trust company Perfection Too, while the Groves family, including children, are its beneficiaries.

In the Federal Court on Tuesday, John Halley, for the Australian Securities and Investments Commission (ASIC), contended the company is “the alter-ego” of Mr Groves.

And he said the corporate watchdog was concerned its assets were being dissipated, noting recent transfers of two Queensland properties, at Currumbin Valley and Palm Beach.
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Problems with the Commonwealth Bank’s internet banking website are due to a high level of traffic, some of which may be malicious, the bank says.

But customers’ money is safe, it says.

“There have been no security breaches and no customer information, money or accounts have been accessed or compromised,” Commonwealth Bank spokesman Steve Batten said.

“We are currently experiencing exceptionally high volumes of traffic, some of which appears to be malicious,” he told AAP.

The source of the suspect traffic, and its type, had not yet been confirmed, he said.
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Demand for credit remains subdued in an uncertain economic climate with only the housing sector showing any signs of strength, new data shows.

The Reserve Bank of Australia’s monthly credit report released on Tuesday shows total credit demand eased 0.1 per cent in May compared with April, to stand at a paltry 3.9 per cent higher than a year earlier.

Annual growth was over 13 per cent in May last year.

Demand for credit by businesses continued to tank against a backdrop of weak trading conditions and a cut in investment plans.
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The number of new home sales declined for the first time in four months in May as fewer first home buyers entered the market, a survey says.

The number of new home sales fell 5.7 per cent in May, according to new figures released by the Housing Industry Association (HIA) on Tuesday.

New home sales had risen for the first four months of 2009.

“The small pull back in sales in May is likely to reflect a plateauing of first home buyer activity combined with continued weakness in the trade-up and investor markets,” HIA said.
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Australasia’s largest real estate group, Ray White, achieved almost a 70 per cent clearance rate and sales of more than $40 million in its latest series of Auction Spectacular residential property events in Queensland.

Auction Spectaculars are being held during June and July at locations throughout Australia and New Zealand, with four events staged in South-East Queensland over the past week.

Ray White Chief Auctioneer Philip Parker said 120 properties were listed at the four auctions in Brisbane and the Gold Coast, and so far 83 had been sold with more than $40 million in sales generated.

Mr Parker said the largest of the Brisbane auctions was held yesterday at the Emporium Hotel in Fortitude Valley when 41 mostly inner-city properties were listed.
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Rural services company Elders Ltd says it has completed agreements with its lenders to extend short dated debt for three months, allowing time to refinance the facilities.

Elders said in a statement on Tuesday that the debt would be extended from June 30 to September 30.

“The extension has been put in place to provide sufficient time to enable orderly completion of the refinancing of the current financing facilities into a new syndicated facility,” the statement said.

“Elders anticipates that the refinancing will be concluded by 30 September 2009.”
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NSW Premier Nathan Rees says unemployment will be the main issue in the state over the next 18 months, so the government is targeting its infrastructure spending on short-term projects to boost jobs.

The recent NSW budget predicted unemployment would rise to 7.75 per cent next financial year, and peak at 8.5 per cent in 2010-11, making it a crucial issue for the state government, Mr Rees said.

“In the short and medium term the key issue … for probably the next 18 months, is going to be jobs,” he told Fairfax Radio on Tuesday.

“If people haven’t seen unemployment rise in their neighbourhood, then I’m willing to bet that it will in the next 18 months as we feel the effects of the global recession.”
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