Lending Central

The companies watchdog is talking to those involved in the Storm Financial collapse to see if a commercial resolution can be reached.

The Australian Securities and Investments Commission said in a statement on Friday that it had completed a major phase of its investigation into Storm Financial and now was entering another.

That would involve confidential discussions with the individuals and entities which were the subject of ASIC’s investigation to see whether a commercial resolution could be reached.

ASIC said a commercial resolution would be preferable to protracted litigation.

ASIC would consider launching compensation actions if a commercial resolution wasn’t possible.
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Bendigo and Adelaide Bank Ltd has hosed down claims that securitisation markets have recovered enough to lift bank competition.

Bendigo and Adelaide Bank chief executive Mike Hirst was responding to comments made by a top Reserve Bank of Australia (RBA) official that the residential mortgage backed securities (RMBS) were “coming back to some extent” given government support for some securitisation issues this year.

Mr Hirst said that while the market for securities backed by residential mortgages was showing signs of recovering, it was still far from the level required to support a fully competitive banking sector.

“There is a long way to go before you could say it will be a source of funding that would provide the non-majors (banks) with the amount of funding they need to be really competitive,” Mr Hirst told AAP in an interview.
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The Australian economy is expected to continue growing strongly, on par with previous cyclical highs experienced during the resources boom.

The Westpac-Melbourne Institute leading index of economic activity, which indicates the likely pace of activity three to nine months into the future, rose 0.2 per cent to post an annualised growth rate of 6.3 per cent in January.

The result, released on Wednesday, was above the long-term trend growth rate of 2.7 per cent.
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A squeeze on interest margins and higher costs hit credit unions’ profits in 2009 as they felt the brunt of the big banks’ pricing power.

Despite putting up a fight for retail deposits and growing their home loan books, the profit margins of Australia’s 100-plus credit unions fell 2.2 per cent to 13.2 per cent during calendar 2009.

Figures from a report by the Australian Prudential Regulation Authority released on Tuesday showed credit unions’ net interest margins (NIM) shrank by 0.5 per cent to 2.5 per cent over the 12 months to December 31, 2009.

Building societies’ NIM remained flat at 2.3 per cent.

Credit unions’ cost to income ratio climbed 3.6 per cent to 80 per cent, while their aggregate return on equity fell 1.9 per cent.
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The financial market response to the minutes of the Reserve Bank of Australia (RBA) board’s latest monetary policy meeting was a marginal step back from the possibility, already seen as less than 50-50, of an interest rate hike next month.

Late on Monday, the futures market had given rate rise about 40 per cent chance.

But in the wake of the release of the minutes of the RBA’s March 2 meeting, at which the cash rate was raised to 4.00 per cent from 3.75 per cent, the implied probability of a rise has been pared back to about 30 per cent.

The minutes suggested the RBA was in less of a hurry to jack the cash rate up than previously thought.
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Australasia’s largest real estate and property group, Ray White, has reported a 20 per cent improvement in its residential and commercial sales results in Australia and New Zealand for February, 2010.

Ray White Chairman Brian White said preliminary figures showed the group in February achieved total sales of $2.310 billion, compared to $1.934 billion in the corresponding month in 2009.

“After a slow start to the year we have had a very strong month in February,” Mr White said.

“The market appears to be absorbing the interest rate rises we have had although we are not quite experiencing the sort of gains that we were achieving towards the end of 2009.”
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The Reserve Bank of Australia (RBA) has left its options open for the April 6 board meeting.

In the minutes of the monetary policy meeting on March 2, the RBA said board members concluded that recently available evidence “had confirmed that it remained appropriate to move gradually towards normal levels, and that it was timely to take another step in that direction”.

There was nothing in the minutes, released on Tuesday, to suggest it be timely to do it again on April 6, however.

The use of the word “gradual” suggests the central bank may be in no hurry, and may wait until May, timing the move for right after the March quarter consumer price index data in late April to highlight the centrality of inflation in its decision-making process.
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Three more banks could face investor concern over flawed mortgage outsourcing deals with Perpetual Ltd that give rise to confusion over who has the legal authority to complete the transactions.

An analyst says that Perpetual could lose as much as 10 per cent of its revenue if all three banks, National Australia Bank, AMP Bank Ltd and Bendigo and Adelaide Bank - in addition to ANZ Banking Group Ltd - drop their business with the fund manager over the flawed contracts.

Perpetual on Monday confirmed that National Australia Bank’s (NAB) HomeSide mortgage lending unit, AMP Bank and Bendigo and Adelaide Bank Bank outsourced the processing of mortgage applications to its mortgage services business.

Credit Suisse analyst Arjan Van Veen said in the unlikely event the banks broke their outsourcing contracts with Perpetual over the issue, Perpetual’s total revenue would drop by 10 per cent.
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New data showing weak lending finance is evidence of an economy slowing after the government stimulus has worn off and could spare borrowers an April interest rate rise, economist says.

Total personal finance commitments fell 1.5 per cent in January, seasonally adjusted, to $6.921 billion, from $7.028 billion in December, the Australian Bureau of Statistics (ABS) said on Monday.

The fixed loan component of the data fell 2.1 per cent, its fifth straight monthly fall since August 2009.

Fixed loans - or loans of a fixed amount - make up 46 per cent of total personal finance commitments.

CommSec economist Savanth Sebastian said the data pointed to a slowing economy and could be enough to stay the Reserve Bank of Australia (RBA) from raising the cash rate from four to 4.25 per cent.
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Mortgage provider RAMS Home Loans has joined with real estate data provider Residex to give property investors access to residential sales information.

Westpac-owned RAMS said the partnership would allow prospective investors to access Residex reports once they identify what suburb or suburbs they are interested in.

The reports include information such as median sale price, median rent, historical and predicted growth as well as a list of current properties for sale.
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Top industry performers were congratulated at the Mortgage and Finance Association of Australia’s (MFAA) annual Excellence Awards held at the Westin Hotel, Sydney, on Friday night.

“This special occasion gives our members, their colleagues and peers the opportunity to celebrate those this year’s industry high achievers,” said Phil Naylor, CEO of the MFAA.

There were 16 award winners on the night, four which were awarded to outstanding individuals and 11 awarded to top performing companies. The most prestigious award, Operator of the Year, was awarded jointly for the first time ever to Horizon Financial and Mildura Finance Limited who were judged as the best from 13 of the categories.

The MFAA congratulates all finalists and winners of the Excellence Awards.
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The Reserve Bank of Australia (RBA) says it is a “reluctant regulator” of credit cards while leaving the door open to force providers to reduce interchange fees.

In a speech on Monday RBA Assistant Governor Malcolm Edey said he was not in a position to predict what the RBA board’s next decision on credit card fee regulation would be, but he said good progress was being made in promoting competition.

“The Reserve Bank is a reluctant regulator,” Dr Edey told the Cards and Payments Australasia 2010 Conference in Sydney.

“We’d prefer to see fees being held down by competition than by direct regulation.

“We believe there’s been good progress in promoting competition over recent years.
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There are signs that consumer borrowing is rising in response to better economic conditions.

Of course, too much debt can be a bad thing, as the global finance crisis reminded us all.

But a willingness to take on debt can be an important indicator for the strength of the spending that drives the economy along, generating jobs and bringing unemployment down.

The latest credit card statistics from the Reserve Bank of Australia (RBA), released on Friday, are tentatively good news in that regard.

Total credit and charge card balances outstanding declined by 1.6 per cent to $46.152 billion in January from $46.912 billion in December.

But these figures are not seasonally adjusted - a fall is normal in January after the pre-Christmas spending binge in December has wound down.
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Greater Building Society says it will begin providing home loans at a lower rate than the big four banks, as it seeks to lure away regional customers.

Greater, which has the largest branch network of any building society in Australia, will start providing home loans from Monday and is establishing operations in Townsville as part of its expansion plans.

Greater chief executive Don Magin says people in regional Australia could benefit from having a home loan with Greater.

“We want people to know that there are large, safe alternatives like the Greater that can offer people very competitive rates, low fees and far better customer service than the banks,” Mr Magin said in a statement on Friday.
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