Australia

Australia’s big banks are set for their worst earnings season since the global financial crisis. A softening housing market, margin pressure from rising funding costs, and the ballooning cost of dealing with the fallout from an inquiry into misconduct in the financial industry, are all squeezing profits, Bloomberg News reported. Australia & New Zealand Banking Group Ltd. and National Australia Bank Ltd. are expected to report their first declines in full-year cash profit since 2016, while Westpac Banking Corp.

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Shareholders in Australia’s big banks shouldn’t get too comfortable. Bank stocks rallied in relief that the interim report from an inquiry into misconduct didn’t contain any specific recommendations. But criticism ran deep as Commissioner Kenneth Hayne lambasted the banks over their culture, conduct, compliance and remuneration practices, Bloomberg News reported. He also took aim at the securities and banking regulators for their timid approach and failure to take court action.
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HFW has won an appeal against a Supreme Court ruling with “significant implications” for insolvency proceedings in Australia, Australasian Lawyer reported. The firm helped Rio Tinto subsidiary Hamersley Iron Pty Ltd overturn a Supreme Court decision that Hamersley could not set off its claims against Forge Group Power Pty Ltd. "Today's decision is not only good news for Hamersley, but for many other unsecured creditors. The rights between contracting parties in the event of insolvency is something impacting almost all businesses,” said partner Matthew Blycha who led the HFW team.
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The Reserve Bank of Australia is downplaying risks to the housing market from rising mortgage interest rates, saying that the cost of funding a home loan is still below that a year ago, The Wall Street Journal reported. In minutes of its Sep. 4 policy meeting released Tuesday, the RBA said that at the time of the board gathering, lenders accounting for around 40% of the market had raised mortgage lending rates.
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Australia’s Wiggins Island Coal Export Terminal obtained court approval on Tuesday for a $3.2 billion debt refinancing plan, offering respite to its owners who would have had to start repayments this month, Reuters reported. The Queensland-based terminal, known as WICET, is 40 percent owned by miner and commodities trader Glencore and was built to service a consortium of eight coal companies during a period of high commodity prices. It will now have the maturity of $2.6 billion in senior debt extended from this month until September 2026, court documents showed.
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One of the longest stalemates in Australian corporate history could be nearing a resolution. Vodafone Hutchison Australia Pty, the joint venture between Vodafone Plc and a unit of Victor Li’s CK Hutchison Holdings Ltd. that runs the nation’s third-largest mobile network, is in talks to merge with homegrown challenger TPG Telecom Ltd., the companies said in statements Wednesday.
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Wesfarmers’ annual profit halved as a result of more than A$1bn in write-offs linked to the sale of Homebase, the Australian retail-to-industrials conglomerate’s disastrous foray into the UK DIY market, the Financial Times reported. The company said on Wednesday that full-year profit for the 12 months through June fell 58 per cent to A$1.2bn (US$861.4m). But it posted strong results from its core Australia and New Zealand businesses, with profit at its continuing operations rising 5.2 per cent to A$2.9bn, slightly ahead of consensus forecasts.
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JB Hi-Fi expects to see another year of declining revenues on this side of the Tasman as the ASX-listed discount consumer electronics retailer attempts to drive profitability in its New Zealand unit, The New Zealand Herald reported. The local division of the Melbourne-based company widened its loss before interest and tax to $2.9 million in the 12 months ended June 30 from an ebit-loss $2.7 million a year earlier. Not only did margins shrink, but revenue dipped 1.1 per cent to $231.5 million with the closure of one store and exit from whiteware goods.
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Hedge funds have found a new way to profit from the sorry state of Australia’s housing market: playing off how much poorer consumers feel as their home values decline, Bloomberg News reported. Managers including Totus Capital and Sydney’s Regal Funds Management are heaping bearish wagers on companies from JB Hi-Fi Ltd. to Harvey Norman Holdings Ltd., betting discretionary retail stocks will wobble as the country’s decades-long property boom goes into reverse and people shop less.
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Australia’s Westpac Banking Corp said on Thursday it would disburse A$100 million ($74.2 million) in cheap loans to farmers as a record dry spell hits parts of the nation, while the country’s lenders fight to regain public trust amidst an ongoing misconduct inquiry, Reuters reported. The drought in Australia’s east, one of the worst on record, is impacting every area of rural life, often with global trade and price implications. Already many cattle graziers are being forced to sell stock they can no longer feed.
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