ANZ profit tumbles; RBA plays down rate cuts; ACCC's Black Friday warning

ANZ profit tumbles; RBA plays down rate cuts; ACCC's Black Friday warning

News in brief

The Reserve Bank could be boxed in when it comes to interest rates, and its deputy Governor Andrew Hauser has called on business to invest to help boost lagging productivity and grow the supply side of the economy.

 

Sales of hybrids and plug-in hybrid vehicles surged last month as the shift to electrification picked up speed. In October, there were just under 100,000 vehicles sold across the country, taking the year-to-date figure to just over one million.

 

The ACCC has warned that retailers found to be using deceptive tactics or misleading shoppers about Black Friday discounts could be issued with penalties.

 

The US federal closure is almost over after renegade Democrats broke ranks with their party and voted to support a deal to end the record-breaking shutdown.

 

The US September quarter earnings season has shown Wall Street companies are growing at their fastest pace in four years, defying predictions that the Trump Administration would trigger a slowdown in corporate America.

Fear-o-meter

The big four banks have reported full year earnings, and it isn’t a great story for investors.

 

There’s growth in costs, not a huge amount of revenue growth, and pressure on profit margins. The expense to income ratio across the big banks is over 50 per cent – the highest level in 15 years.

 

Tech spending is high, and notwithstanding recent headlines about job cuts, headcount is at a record level.

 

Broadly, ANZ’s result was about clearing the decks for the new boss, taking the medicine of poor governance in recent years.

 

Westpac’s future is about building the business as it pushes to unite a bunch of legacy technology systems.

 

And NAB is all about protecting its strong small and medium size business franchise.

 

Commonwealth Bank, which reported in August, and will outline its quarterly results today, is proving a very stiff competitor for all the banks in deposits, home loans and business lending.

 

Which one do investors like? Well ANZ got the biggest share price bump, though it is also relatively cheap compared to the other big banks.

Fear & Greed Q+A today

On the key themes from the big bank results, including the expense to income ratio being over 50 per cent – the highest level in 15 years:

 

"Technology is part of that story. So is personnel and headcount. So there's been quite a lot of restructuring happening at the banks of late. And we've heard about that in the news, but that restructuring does take time to flow through. And at the same time, the banks have been investing for their strategic focus areas. So not only are they investing in technology, in particular looking at how they can modernise legacy systems but also capture the opportunities that are afforded through artificial intelligence. And so they're investing in higher cost personnel who are experienced engineers and technologists.

 

And they're also investing in bankers because they're chasing after that proprietary lending channels for home lending and in the business space. So again, those are relationship type bankers and they command a higher salary. So whilst they might be doing some reconfiguration of their workforce, what happened in this last quarter is that you actually had an overlap of that reconfiguration, the cost of that restructuring, plus the new hires for these strategic areas coming in, and we're at an all-time high in terms of headcount at the banks."

ANZ’s cash profit tumbled 14 per cent for the year to September, dragged down by redundancy costs and legal penalties, and new CEO Nuno Matos said the result wasn’t good enough. The cash profit was $5.8 billion and apart from the one-off costs, profit was flat on the prior year. The institutional and New Zealand businesses did well, while the Australian retail, business and private bank divisions underperformed. ANZ’s share price jumped three per cent yesterday, and of the three banks to report over the past eight days – the others being NAB and Westpac – ANZ has been best received, at least in share price terms. The bank also announced that its former leadership team, including one-time CEO Shayne Elliott, who will lose a combined $32 million in bonuses over corporate governance failures.

Greed-o-meter

Rank	Vehicle	Oct-25	% diff
1	Toyota HiLux	4,444	−1.7
2	Ford Ranger	4,402	−7.5
3	Toyota RAV4	4,401	−9.1
4	Ford Everest	2,435	−8.7
5	Toyota LandCruiser	2,090	−8.7
6	Hyundai Kona	2,057	+14.3
7	Chery Tiggo 4 Pro	1,975	+457.9
8	Isuzu Ute D-Max	1,896	−17.4
9	Mazda CX-5	1,813	−1.1
10	Mitsubishi Triton	1,770	+14.3

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Here are the top ten new vehicles sold in October. Sales from China have risen 40 per cent year-on-year - headlined by the growth in sales of Chery's small SUV below.

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Source: FCAI