SYDNEY: National Australia Bank (NAB) flagged higher expenses for the second time in four months yesterday, citing higher personnel and leave costs.
NAB, Australia’s biggest business lender, bumped up its cost forecast for 2022 to between 3% and 4% from 2% to 3%.
That excludes the impact of its US$882mil (RM3.93bil) buyout of Citigroup’s local consumer business, which became effective on June 1.
Part of the cost jump comes from expected provisions of between A$60mil (RM186.6mil) and A$100mil (RM311mil) related to a previously disclosed agreement with Australia’s financial crime regulator to fix shortcomings in anti-money laundering compliance.
Cash profit at NAB did, however, come in 6% higher at A$1.8bil (RM5.6bil) for the quarter ended June 30, compared with A$1.7bil (RM5.3bil) a year ago, as it benefited from an increase in home and business lending, and growth is deposits.
The figure was in-line with Morgan Stanley’s estimate of A$1.8bil (RM5.6bil).
“As the economy changes, continued low unemployment and healthy household and business balance sheets are helping mitigate the impacts of higher inflation and interest rates,” said chief executive officer Ross McEwan.
While higher rates, soaring cost of living, and weak consumer sentiment have effectuated a reversal in home prices from record levels reached last year, McEwan said 70% of customer home loan repayments were ahead of schedule.
Runaway inflation has prompted the Reserve Bank of Australia to tighten monetary policy this year, aiding margins of banks that grappled with record-low interest rates for the past two years.
“Overall, we would view this third quarter update as very much in line with consensus with few surprises,” UBS analysts said in a note.
“The commentary on net interest margin is maybe a bit disappointing in the context of some banks which have already reported, but the underlying margin trend is as expected.”
Excluding its markets and treasury business and the impact of the Citi acquisition, NAB’s net interest margin for the April-June quarter was slightly higher than the first half’s quarterly average due to higher interest rates, partly offset by stiff competition in home lending.
The country’s biggest lender, Commonwealth Bank of Australia, will release annual results today. — Reuters
A farmer who looks set to lose his farm after taking on his bank over what he says were dodgy lending practices has vowed to keep fighting for accountability in financial services.
Key points:
Ronald Feierabend has accused Suncorp Bank of withholding essential documents that would have allowed him to resolve his case for free
University of Wollongong’s Andy Schmulow says the regulatory system should require banks to provide they acted fairly
A review has identified complex laws and difficult definitions were key problems in the financial sector
It comes amid fears more Australians could find themselves at the mercy of a financial mediation system in need of review.
Ronald Feierabend has been in dispute with Suncorp Bank since he discovered discrepancies in the budget being used to estimate the profitability of his sugar cane farm Wingadee, near Bundaberg, during an application to refinance in 2014.
A series of mediations failed to resolve the dispute, and in 2021 the Supreme Court ruled that Suncorp could appoint receiver managers and sell the farm to recover outstanding costs.
The property will now be auctioned on September 1.
According to prudential regulation expert Andy Schmulow, the outcome was a sign of the failures in a debt mediation system that still favored the banks.
Mr Schmulow has called for a complete overhaul of the financial dispute resolution process.
‘They’re circling like vultures’
Throughout his long-running complaint, Mr Feierabend said he had been subjected to extreme pressure exerted by the bank, which he accused of not acting in good faith.
Police escorted Mr Feierabend off his farm in March.(Rural ABC: David Barnott-Clement)
In March, police escorted him off the farm.
“There’s been people who have been eyeing off the property, and you know, they think it’s going to be a fire sale,” Mr Feierabend said.
He alleged the bank withheld essential documents and failed to disclose his right to a free, internal dispute resolution process that would have saved him tens of thousands of dollars and resolved the matter sooner, to claim the bank denies.
“Emotionally, the way I’ve been attacked, I feel like I’ve been violated,” he said.
Suncorp Bank says it works within all legislative requirements and best practices.(AAP: Dave Hunt)
“I’ve seen the farm deteriorate into such a state that the whole farm needs to be refurbished or rebuilt.”
A spokesman for Suncorp Bank said due to confidentiality constraints, it would not comment directly on Mr Feierabend’s case.
“We are committed to working with and supporting our customers and take our responsibilities as a longstanding Queensland bank, with strong roots in agribusiness, very seriously,” he said.
“Suncorp Bank has robust internal processes and resources to ensure our customers are supported, including the option of having an impartial internal review of a complaint.”
Twin Peaks regulation fails
Australia’s financial regulation system is often referred to as the “twin peaks” model because of the interaction between the Australian Securities and Investment Commission (ASIC), which regulates the conduct of the sector, and the Australian Prudential Regulation Authority (APRA), which is charged with ensuring the stability of the broader financial system.
Dr Schmulow, who is a senior lecturer in the School of Law at the University of Wollongong, said it was a model that had solved many issues in the financial sector but failed to protect consumers.
“The Australian model is of great international interest, but perhaps of more international interest is why has such a good model failed so spectacularly in terms of regulating conduct in the financial industry?” he said.
“How do we know it’s failed so spectacularly? Well, because that’s the evidence [that] came out of the royal commission.”
“The reasons why it has failed are independent of the model itself… [and] would have caused the same failures had we used any other models for the regulation of the financial industry.”
Dr Schmulow says the culture at banks has not changed since the royal commission.(Supplied)
Dr Schmulow cited the broad remit of ASIC, the size, complexity, and in some cases, contradictory nature of the Corporations Act 2001 and timidity in the regulators as reasons the system was still failing after the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry.
Instead, he advocated for a “principles-based, outcome-determined” regime that would allow a customer to argue their case on the basis of fairness.
“In Suncorp’s case and their loans to Mr Feierabend, it would have been up to Suncorp to prove they had not acted unfairly,” he said.
“From what it sounds like, Suncorp has acted in a manner which is just unconscionable.
“Hopefully, under a principles-based regime, they wouldn’t get away with it.”
‘Bait and switch’ code duping consumers
In a statement, Suncorp Bank’s spokesman said the bank “ensures we work within all legislative requirements and best practice, including the Banking Code of Practice.”
But Dr Schmulow said the voluntary code was a smokescreen, and as more people found themselves in financial distress, it would be shown to be ineffective at changing the behavior of institutions towards their customers.
“I would actually say that the banking code of practice and its enforcement provisions are something akin to a bait and switch trick,” he said.
“It’s a deception that is put before the consumer to make the consumer think that they have rights of recourse.
“I can give you an assurance there will be more scandals because the culture in our big banks has not changed.”
A spokesman for the Australian Banking Association (ABA), which established the code, said it was enforceable through the Australian Financial Complaints Authority (AFCA) and contract law.
“It clearly sets out the obligations of banks to ensure fair dealings with customers who have a dispute, including obligations by banks to comply with the Australian Securities and Investment Commission (ASIC) guidelines in resolving complaints,” he said.
Farmer fighting ‘to the death’
Mr Feierabend has appealed to ASIC, AFCA, APRA, the ABA, the Australian Consumer Complaints Commission (ACCC) and numerous senators about his treatment from the bank.
AFCA said it could not investigate his claims due to time limits on when they could consider a complaint, while the other agencies determined his complaint to be outside their jurisdiction and referred him back to ASIC.
In a statement, a spokesman for ASIC said reports of misconduct were received in confidence, and so it would not comment on Mr Feierabend’s case or confirm if it was investigating.
Mr Feierabend has appealed to the regulators in his dispute with Suncorp Bank.(Rural ABC: David Barnott-Clement)
But Dr Schmulow said the broad scope of ASIC, coupled with a culture that did not aggressively pursue misconduct, meant individuals rarely had a chance to have their complaints investigated.
Mr Feierabend said despite all the setbacks, he had no regrets, and his legal team was continuing to investigate the mediation process.
“This is a matter of right and wrong, and for me, it’s a fight to death now,” he said.
“I still believe right to the bottom of my heart that we will come out of this with the truth.
“I know I’m not the only one in this position. I would do it again. I couldn’t do it any differently.”
As part of the response to the royal commission, the Australian Law Reform Commission is currently reviewing the laws that govern the sector, with a view to simplifying them.
An interim report tabled in parliament in February 2022 identified legislative complexity, overly prescriptive legislation, difficulty with definitions and obscured goals as key problems.
The Reserve Bank of Fiji (RBF) has begun issuing a Chinese-themed 88-cent commemorative banknote, which has been causing a stir with many questioning the timing and significance of the release.
Key points:
The banknote has been issued as a collectors’ item and will not be in circulation
It features Chinese imagery, alongside the Fijian coat of arms
The release has been polarizing at it comes at a time of geopolitical tension over China’s Pacific influence
The 88-cent collectors’ item was released on the eighth day of the eighth month of the year.
The number eight is considered a lucky number in Chinese culture, bringing wealth and fortune — and the more eights the better.
Accompanying the lucky Chinese number, one side of the note features an image of the Chinese god of wealth and a money tree.
The words “Good luck and good fortune. May prosperity be yours” are printed in the corner.
The other side has a hibiscus flower, the Fiji coat of arms and the Governor of the Reserve Bank’s signature.
The note is available for purchase from the RBF for FJ$28 ($18), but as it is numismatic, and so purely for collectors, it will not be in circulation.
The front of the banknote features Fijian symbols alongside the Chinese lucky number denominational value. (Fiji Reserve Bank)
Why has it been released?
The issue of the note has raised eyebrows and sparked a flurry of confusion on social media.
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People joked about the worth of the 88-cent currency, while others questioned why the RBF would release the note at a time when China’s growing influence in the Pacific has been causing diplomatic tension.
Following the “misinformation and speculation on social media,” the RBF issued a clarification statement.
It said the banknote was created to generate sales income targeting the Chinese and wider Asian market, adding that “NO NEW $0.88 numismatic banknotes will be entering into circulation”.
“The newly-announced $0.88 numismatic banknote is among the hundreds of non-circulation numismatic currency that the RBF has produced since 1974,” the statement said.
“The practice is similar to that of stamp production, whereby hobbyists can purchase the banknotes and coins for their collections.”
In the past, the RBF has issued banknotes and coins with Christmas imagery, celebrities, landmarks and Fijian fauna themes.
While it is common for the RBF to issue themed numismatics banknotes and coins, Biman Prasad — the leader of the National Federation party — said they are usually produced with a specific intention.
“They are normally produced to mark commemorative events of both national and sometimes international significance,” Mr Prasad told the ABC’s Pacific Beat program.
“I think the controversy is, what does it mean? What does this commemorate?”
De La Rue — a British company that collaborated with the RBF to design and produce the banknote — said it was released to bless people with fortune in challenging times.
“This theme was chosen because it was felt appropriate to wish people wealth and good fortune in the context of challenging global events,” De La Rue said.
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The RBF has generated over $8 million in income through the sale of numismatic banknotes and coins.
Mr Prasad said it is odd for the bank to be focusing on raising funds when there are more important issues to address.
“The Reserve Bank should be really concerned about other issues, particularly inflation and high cost of living,” he said.
Suspicion vs celebration
The Chinese community in Fiji is small but significant.
There are around 8,000 people of Chinese origin who live in the country, which makes up about 1 per cent of the population.
Mr Prasad said the community is respected and had contributed to the development of the country in a significant way.
However, in the current geopolitical circumstances, it creates “suspension and controversy”.
“At this point in time, it doesn’t make sense for them to engage in these kinds of novelty exercises,” he said.
Neisau Tuidraki is a Fijian based in Melbourne who describes herself as an “avid” banknote collector.
She thinks the new note should be embraced as a way to celebrate Fiji’s Chinese community.
“It’s very polarizing for some people, but avid collectors like myself will probably buy it up,”Ms Tuidraki told the ABC.
“I’ve actually talked to a couple of my family back home and asked them to go into the Reserve Bank and purchase one for me.”
Neisau Tuidraki sees the note as a celebration of Fiji’s Chinese community. (Supplied )
While Ms Tuidraki acknowledges the animosity regarding China’s influence in the region, for her the note symbolizes the generations of positivity.
“I can honestly say that some of the best Chinese food I’ve had is in Fiji,” she said.
“As Fijians, we should embrace it. We have a very vibrant and diverse Chinese community in Fiji, and I think it’s a good way to celebrate that.”
Australian National University professor of finance Meijun Qian also believes the move should not be politicised.
She views it simply as a symbol of economic collaboration.
“It’s being too criticized,” Professor Qian told the ABC.
“If Fiji wants to develop more economic connections with China with this kind of symbolic thing, I don’t think they need to get any extra political attention.”
Dozens of major bank branches across Australia are set to close within months, with the finance union expecting more than 100 jobs to be cut.
A total of 37 branches are confirmed to close over the next few months.
Watch more on the RBA raising interest rates in the video above
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What does it mean for customers and jobs?
Westpac Group has made the most significant slash, with 24 branches set to shut nationwide.
The group says the “majority” of employees will be unaffected by the move and will go on to other jobs within the company.
Chief customer engagement officer Ross Miller said the closures are an investment in how customers are choosing to bank.
“Declining customer use of branches means that, in some instances, we may take a difficult decision to leave a branch location,” Miller told 7NEWS.com.au, adding Westpac Group services more than five million digitally active customers.
“In these instances, we continue to support our customers with access to banking services via Bank@Post, telephone, mobile and virtual banking.”
Miller said customers will be notified in advance about the changes and will be directly connected to the services they will need to continue to bank.
He said there was a “robust process” in place to help employees find new opportunities within Westpac Group, meaning “the majority of employees affected secure a new role and continue their career”.
“As we continue to adapt to our changing customer needs, this will result in new opportunities for our employees within the Westpac Group as we grow our phone, digital and virtual offerings,” he said.
Westpac Group is closing 24 branches across Australia as it shifts to digital. Credit: AAP
NAB has confirmed it is closing nine branches, and vowed no employees would be cut.
“As more and more customers are choosing to bank online, we’ve made the difficult decision to close some branches,” personal banking executive Krissie Jones told 7NEWS.com.au.
“The branch teams have begun talking to customers about alternatives available such as Bank@post, mobile bankers, home lending specialists or business bankers who they can meet in person or via phone or video link.”
Jones said employees at closing branches will be offered jobs at other branches or elsewhere throughout the organisation.
“There will be no job losses as a result of any branch closure and we will still be there for our customers, just in different ways,” she said.
Australian Banking Association chief executive Anna Bligh says banks are investing in new digital services to meet the needs of customers, who have shifted towards online banking.
“Banks remain committed to providing banking services to every Australian, especially those in regional and remote areas,” she told 7NEWS.com.au.
“Despite more than 80 per cent of Australians preferring to do their everyday banking online, banks still have thousands of branches across the country, in addition to the banking services that banks pay to make available in 3500 Australia Post outlets.
“There will be a place for physical bank branches in Australia well into the future, but Australians are embracing digital banking with their arms wide open.”
NAB has vowed no jobs will be lost in the branch closures. Credit: JOEL CARRETT/AAPIMAGE
While the banks say they are committed to supporting workers transition to new roles, the Finance Sector Union expects 182 Aussies to lose their jobs as the closures reach “crisis point”.
“This latest list of closures means the big four have closed more than 550 bank branches across Australia since January 2020,” national secretary Julia Angrisano told news.com.au.
“We must act to stop the banks walking away from communities in our suburbs and towns.
“It’s time to examine the impact of these closures which have hit hundreds of communities across the country.”
Customers at all the banks will continue to be able to access Bank@post at Australia Post Offices.
The full list of branch closures
WA
Westpac: Mandurah, South Perth
SA
Bank SA: Munno Parra, St Peters
VIC
Westpac: Braeside, Whittlesea, Werribee, Lilydale
Bank of Melbourne: Croydon, Coburg, Fitzroy, Sunbury, Footscray, 114 William St Melb, Mornington
