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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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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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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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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Movements on credit card interest rates by the big four banks over two years show banks have kept 85 per cent of the net benefit gained from the Reserve Bank of Australia’s (RBA) interest rate cuts.

By March 1 the net impact of the RBA’s movements in the official cash rate over the last two years was a 3.5 per cent decline from the cycle’s high of 7.25 per cent in March 2008.

While banks passed on the majority of the RBA’s interest rate cuts to home loan borrowers, data from financial comparison website RateCity shows the big four kept 85 per cent, on average, of the net gains of the interest rate movements from credit card borrowers.

A comparison of movements in interest rates charged on both standard and low-rate personal credit cards over the past two years showed the net impact of rate hikes and cuts was an average drop of just 0.5 per cent.
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Housing loan approvals fell again in January as an increased flow of credit to investors was more than offset by the continued slide in lending to first home buyers.

The number of loans to home buyers fell by 7.9 per cent in seasonally adjusted terms, the Australian Bureau of Statistics (ABS) said on Wednesday.

It was the fourth fall in a row and the biggest for nine years.

It brought to the total to a 15-month low, 21 per cent below the peak in June.

The proportion of first-timers in the total fell to 20.5 per cent, also a 15-month low, well down from the recent peak of 28.5 per cent in May.
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The Reserve Bank of Australia’s (RBA) decision to raise interest rates in this month has failed to dent consumer confidence, a report says.

The Westpac-Melbourne Institute consumer sentiment index rose 0.3 index points in March to 117.3 points, an increase of 0.2 per cent.

The RBA lifted the cash rate 25 basis points to 4.0 per cent, from 3.75 per cent, at its March board last week.

It was the fourth rate hike since October last year.

Westpac chief economist Bill Evans said it was a “solid result given he backdrop of an official rate rise”.
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Australia’s economic future will be challenged by an under-supply of capacity and housing, despite decades of economic reform shielding Australia from the worst of the global downturn, the Reserve Bank of Australia (RBA) says.

The nation is entering a new phase of economic expansion with less spare capacity than was thought likely, with unemployment appearing to have peaked at around 5.8 per cent, RBA assistant governor (economics) Philip Lowe says.

“The issues we face are, therefore, quite different from those confronting most of the other advanced economies,” Dr Lowe told the Urban Development Institute of Australia National Congress on Wednesday.

“Elsewhere, the challenge is to get private demand to grow on a sustainable basis so that it can catch up with the supply potential of the economy.
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A benign labour force report for February will probably be sufficient for the Reserve Bank of Australia (RBA) to leave the official cash rate unchanged next month, economists say.

The jobless rate edged up to 5.3 per cent in February from a downwardly revised 5.2 per cent in January, with the number of people employed barely rising.

This was the first rise in the jobless rate since peaking at 5.8 per cent last October.

Just 400 jobs, seasonally adjusted, were added to the workforce in February, Australian Bureau of Statistics data showed on Thursday.

“This is a steady result,” Employment Minister Julia Gillard told reporters in Canberra, adding employers move to taking on more full-time employees and reducing part-time work.
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Business confidence and conditions strengthened in February a four month high, but growth remains below the highs seen in late 2009, a survey shows.

But businesses were caught unprepared for the surge in February, as inventories declined and hiring slowed.

The National Australia Bank (NAB) business confidence index gained four points to plus-19 points in February.

It was the survey’s highest level since November 2009 when it also touched plus 19 points, which at the time was a seven-year high.
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