Australia and New Zealand Banking Group (ANZ):
Counsel assisting the royal commission into the banks has suggested ANZ is breaking the law by failing to independently verify financial information on home loan customer applications received through mortgage brokers. The mortgage broker channel is crucial to ANZ (ANZ), writing nearly 60 per cent of the bank’s $67bn a year in home loans. ANZ has rejected a recommendation it review the bank statements of home loan applicants for “obvious inconsistencies” that was made by big four accounting firm KPMG following a probe ordered by the prudential regulator, the commission heard this morning. And in a further blow to the broker model, which took a heavy battering from the royal commission last week, ANZ’s head of home loans, William Ranken, admitted there was no incentive for brokers to properly examine customer expenses. Counsel assisting the royal commission, Rowena Orr, QC, took Mr Ranken to an Australian Securities and Investments Commission regulatory guide detailing what financial institutions should do to ensure they are engaging in responsible lending.
BHP Billiton Limited (BHP):
BHP has supercharged the monster Escondida copper mine in Chile, finishing $US8 billion ($1.3bn) worth of work just as global growth is picking up and the forecast rise of electric cars and renewable power is tipped to boost long-term copper demand. But now BHP’s Minerals America head Danny Malchuk and his team at the Escondida open pit mine are getting ready to swim against the tide. This is because a coming grade drop means that at the end of the next decade, the giant mine will need to process about 40 per cent more ore to produce the same amount of metal as it does now.
Brambles Limited (BXB):
Brambles shares are up 2 per cent today to $9.86, bringing gains for the stock to 7 per cent since March 8. The firm was upgraded to outperform at Credit Suisse on Friday, a day after the logistics firm held an investor day in London, headed by chief executive Graham Chipchase and several of his top executives. At the investor day, Brambles revealed it will spend $300 million over the next three years aggressively accelerating the levels of automation and robotics in its plants. Brambles, a former sharemarket bastion of consistent performance, had a big fall from grace in January 2017 when it revealed a profit downgrade. The downgrade occurred just weeks before Mr Chipchase started in the role. Brambles on February 19 announced a bottom-line net profit after tax of $US447.2 million for the first half of 2017-18, three times the size of the bottom-line profit a year ago. This year's figure was bolstered by a one-off $US130.1 million tax benefit stemming from the tax cuts introduced by Donald Trump. Total sales revenue for the first half was up 9 per cent to $US2.75 billion.
Commonwealth Bank of Australia (CBA):
CBA-owned mortgage broker Aussie Home Loans flunked an internal risk audit in December, documents tendered to the financial services royal commission have revealed. The CBA’s group audit and assurance team gave Aussie a “red rating” in its report, dated December 11, 2017. It found that “controls are not appropriate for the risks being managed”. “There are a significant number of issues that require immediate attention.” Issues raised by the audit team included brokers not complying with responsible lending rules, and the governance of broker behaviour. Aussie’s management also earned a “marginal” rating because it was too slow to deal with issues raised in a previous audit. That audit, in 2015, also gave Aussie a red rating — although over different issues. The commission has been hearing evidence about the poor state of Aussie’s oversight of brokers, four of whom have been convicted of fraud offences after submitting loans based on dodgy documents or false information.
National Australia Bank Ltd (NAB):
National Australia Bank is discounting key home buyer rates by 142 basis points in its first rates move since last week's bruising exposures about mortgage fraud at the banking royal commission. The nation's third last lender, with about 15 per cent share of the mortgage market, is heavily discounting principal and interest, owner occupier loans to 3.69 per cent. The new rate, which is being promoted through its broker network, is a 1.42 per cent discount off the current advertised rate for the base variable rate home loan. NAB relies on brokers to recommend about 42 per cent of its mortgages, compared to about 50 per cent for the other big four lenders and more than half for non-majors, according to analysis by investment bank Morgan Stanley.
Rio Tinto Limited (RIO):
Rio Tinto has escalated a $US150 million ($192.5m) Mongolian tax dispute over the Oyu Tolgoi copper and gold mine, starting a process under its mine investment agreement that could lead to international arbitration. Rio’s Canadian-listed subsidiary, Turquoise Hill, yesterday said the $US11bn mine would face higher ongoing taxes if Rio was unsuccessful in fighting the tax charges. The dispute process is laid out in Rio’s 2009 investment agreement, which this week was revealed to be under investigation by Mongolian anti-corruption officials for “possible abuse of power by authorised officials” during its negotiation. The tax dispute and power-abuse probe, which has not implicated Oyu Tolgoi, come amid sharper recent focus on the developing and cash-strapped nation’s share of the spoils of the mine, which is expected to contribute one-third of GDP.
Wesfarmers Ltd (WES):
New Wesfarmers chief executive Rob Scott will have greater flexibility to undertake merger and acquisitions to diversify the conglomerate’s earnings base, following the ambitious spin-off of the giant Coles supermarkets business, analysts say. Mr Scott on Friday outlined plans for Wesfarmers to demerge its Coles grocery division to create a new top 30 company on the ASX. He said the move was about “setting Wesfarmers up for the next decade’’. Wesfarmers’ share price shot up more than 6 per cent to $43.80 following the announcement of the spin-off which, subject to shareholder and other approvals, is expected to be completed in the 2019 financial year. The demerger, which comes amid increasing competition in the supermarket sector, will create a new stand-alone company worth as much as $20 billion. At the end of December, Coles accounted for about 60 per cent of Wesfarmers’ capital employed and 34 per cent of divisional earnings.
(Source: AIMS)
Counsel assisting the royal commission into the banks has suggested ANZ is breaking the law by failing to independently verify financial information on home loan customer applications received through mortgage brokers. The mortgage broker channel is crucial to ANZ (ANZ), writing nearly 60 per cent of the bank’s $67bn a year in home loans. ANZ has rejected a recommendation it review the bank statements of home loan applicants for “obvious inconsistencies” that was made by big four accounting firm KPMG following a probe ordered by the prudential regulator, the commission heard this morning. And in a further blow to the broker model, which took a heavy battering from the royal commission last week, ANZ’s head of home loans, William Ranken, admitted there was no incentive for brokers to properly examine customer expenses. Counsel assisting the royal commission, Rowena Orr, QC, took Mr Ranken to an Australian Securities and Investments Commission regulatory guide detailing what financial institutions should do to ensure they are engaging in responsible lending.
BHP Billiton Limited (BHP):
BHP has supercharged the monster Escondida copper mine in Chile, finishing $US8 billion ($1.3bn) worth of work just as global growth is picking up and the forecast rise of electric cars and renewable power is tipped to boost long-term copper demand. But now BHP’s Minerals America head Danny Malchuk and his team at the Escondida open pit mine are getting ready to swim against the tide. This is because a coming grade drop means that at the end of the next decade, the giant mine will need to process about 40 per cent more ore to produce the same amount of metal as it does now.
Brambles Limited (BXB):
Brambles shares are up 2 per cent today to $9.86, bringing gains for the stock to 7 per cent since March 8. The firm was upgraded to outperform at Credit Suisse on Friday, a day after the logistics firm held an investor day in London, headed by chief executive Graham Chipchase and several of his top executives. At the investor day, Brambles revealed it will spend $300 million over the next three years aggressively accelerating the levels of automation and robotics in its plants. Brambles, a former sharemarket bastion of consistent performance, had a big fall from grace in January 2017 when it revealed a profit downgrade. The downgrade occurred just weeks before Mr Chipchase started in the role. Brambles on February 19 announced a bottom-line net profit after tax of $US447.2 million for the first half of 2017-18, three times the size of the bottom-line profit a year ago. This year's figure was bolstered by a one-off $US130.1 million tax benefit stemming from the tax cuts introduced by Donald Trump. Total sales revenue for the first half was up 9 per cent to $US2.75 billion.
Commonwealth Bank of Australia (CBA):
CBA-owned mortgage broker Aussie Home Loans flunked an internal risk audit in December, documents tendered to the financial services royal commission have revealed. The CBA’s group audit and assurance team gave Aussie a “red rating” in its report, dated December 11, 2017. It found that “controls are not appropriate for the risks being managed”. “There are a significant number of issues that require immediate attention.” Issues raised by the audit team included brokers not complying with responsible lending rules, and the governance of broker behaviour. Aussie’s management also earned a “marginal” rating because it was too slow to deal with issues raised in a previous audit. That audit, in 2015, also gave Aussie a red rating — although over different issues. The commission has been hearing evidence about the poor state of Aussie’s oversight of brokers, four of whom have been convicted of fraud offences after submitting loans based on dodgy documents or false information.
National Australia Bank Ltd (NAB):
National Australia Bank is discounting key home buyer rates by 142 basis points in its first rates move since last week's bruising exposures about mortgage fraud at the banking royal commission. The nation's third last lender, with about 15 per cent share of the mortgage market, is heavily discounting principal and interest, owner occupier loans to 3.69 per cent. The new rate, which is being promoted through its broker network, is a 1.42 per cent discount off the current advertised rate for the base variable rate home loan. NAB relies on brokers to recommend about 42 per cent of its mortgages, compared to about 50 per cent for the other big four lenders and more than half for non-majors, according to analysis by investment bank Morgan Stanley.
Rio Tinto Limited (RIO):
Rio Tinto has escalated a $US150 million ($192.5m) Mongolian tax dispute over the Oyu Tolgoi copper and gold mine, starting a process under its mine investment agreement that could lead to international arbitration. Rio’s Canadian-listed subsidiary, Turquoise Hill, yesterday said the $US11bn mine would face higher ongoing taxes if Rio was unsuccessful in fighting the tax charges. The dispute process is laid out in Rio’s 2009 investment agreement, which this week was revealed to be under investigation by Mongolian anti-corruption officials for “possible abuse of power by authorised officials” during its negotiation. The tax dispute and power-abuse probe, which has not implicated Oyu Tolgoi, come amid sharper recent focus on the developing and cash-strapped nation’s share of the spoils of the mine, which is expected to contribute one-third of GDP.
Wesfarmers Ltd (WES):
New Wesfarmers chief executive Rob Scott will have greater flexibility to undertake merger and acquisitions to diversify the conglomerate’s earnings base, following the ambitious spin-off of the giant Coles supermarkets business, analysts say. Mr Scott on Friday outlined plans for Wesfarmers to demerge its Coles grocery division to create a new top 30 company on the ASX. He said the move was about “setting Wesfarmers up for the next decade’’. Wesfarmers’ share price shot up more than 6 per cent to $43.80 following the announcement of the spin-off which, subject to shareholder and other approvals, is expected to be completed in the 2019 financial year. The demerger, which comes amid increasing competition in the supermarket sector, will create a new stand-alone company worth as much as $20 billion. At the end of December, Coles accounted for about 60 per cent of Wesfarmers’ capital employed and 34 per cent of divisional earnings.
(Source: AIMS)
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