The Northern Territory news Fri 13 Aug 2021
The Northern Territory news; NewspaperNT
Community newspapers -- Northern Territory -- Darwin.; Australian newspapers -- Northern Territory -- Darwin.
News Corp Australia
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News Corp Australia
FRIDAY AUGUST 13 2021 BUSINESS 31 V1 - NTNE01Z01MA TERRY McCRANN THE NationalAustralia Bankprofit detailconfirms what theCBA numbers showed this years strong bank profits are all about the free money theyve been getting from the Reserve Bank and the big provisions they made a year ago for loan losses that mostly never arrived. The CBA reported its profit for the 2020-21 year to June up 20 per cent but its profit before the loan loss provisions was almost exactly unchanged. To be pedantic it was down a tiny fraction. Last year CBA put aside $2.5bn for expected loan losses after we all had just come through the biggest plunge in GDP on record in the June quarter and as we headed into the continuing Covid abyss. This year it put aside just $554m. Not only didnt the losses come, but CBA and all the other banks then rode a home lending boom the likes of which they (and us) have never seen before. On the one side they were able to play Santa, lending to owner-occupier buyers at barely 2 per cent interest and rates not that much higher even for investors. They were able to do so because the RBA was playing an even bigger Santa and that meant the banks kept most of that 2 per cent or so interest as pure margin, because most of the money they were using to finance the lending was coming to them almost literally (interest) free. The RBA was directly lending them by the finish at June a total of $188bn at an interest rate of just 0.1 per cent. The CBA got $51bn, NAB got $32bn. Nice if you can get it. Money printed for you by the government and carrying an interest charge of just 0.1 per cent; which you then very generously lend out virtually risk-free at 2 per cent or more. Actually indeed, much more on true, riskier small business loans. I guess this is just another example of the we are all in this together to sit right alongside with the politicians and the public servants, generously, on our shared behalf, not taking a pay cut or losing their jobs. In fact this was the much smaller part of the benefit the RBA mandated for the banks. Its actions to keep bond yields down at the same 0.1 per cent meant the banks got most of the rest of their funding also dirt cheap to free. Deposits. Wholesale borrowing. There was a small negative for them. They couldnt lend it all out at 2 per cent plus; they all built up big cash balances and found they had the same problem that their depositors had: nobody would pay them more than close-to-zero interest on that cash. So we see NAB reporting its June quarter profit before loan loss provisions down 1 per cent, very similar to the CBA change for its full year. But the profit after the loan loss provisions was only up 1 per cent, nothing like the CBAs 20 per cent. How come? Ah, it was all about the timing. NAB and the other banks that balance at endSeptember, ANZ and Westpac took their really big loan loss provisions in their profits for the six months to March last year. The best guide to NABs real performance is this June quarter compared with the pre-Covid 2019 June quarter. On that basis profit before loan loss provisions was up 5 per cent, while profit after those provisions and a normal year two years ago was down 6 per cent. This points to the challenge going forward into the current new normal of the snap lockdowns that turn into weeks and months; and then whatever the new normal version 2.0 is once we are (nearly) fully vaccinated. The banks have got the RBAs both direct and indirect free money into 2024. But they might have to start making bigger loan loss provisions and, this time, actually use them. The growth from relatively riskless home loans is also likely to peter out. This could be as good as it gets for the banks and their shareholders. Billions in free money: whats not to like? to AMPs portfolio review. AMP shares closed 3.2 per cent higher at $1.115 on Thursday. AMPs new chief executive Alexis George, who started in the role early this month, was upbeat about the companys outlook as transformation of the group gathered pace. We are starting to see some positive signs of growth and innovation, particularly in our bank and platforms businesses where we are introducing new services that our clients want, she said. AMP said the demerger of its private markets unit was on track with an ASX listing expected in the first half of 2022, following shareholder approval. Getting our demerger done will be a core priority. Weve set out a clear timeline to establish and separate the AMP Capital Private Markets business, Ms George said. The AMP board again opted not to declare a dividend after not paying one in the latter half of 2020. The board continues to maintain a conservative approach to capital management to support the transformation of the business, the company said. AMPs bank and NZ wealth management arms were the only divisions to post a rise in underlying profit. NO AMP DIVIDEND DESPITE FIRST-HALF GAINS AMP chief executive Alexis George is upbeat about the businesss outlook, as its transformation continues. Picture: John Feder/The Australian *Entries open at 9.00am AEST on 2 August 2021 and close 11.59pm AEST on 3 October 2021. Australian residents who are eligible +Rewards members only. Limited to one entry per eligible member. Winners determined at 11.00am AEST on 4 October 2021 at TPAL, Level 2, 11 York Street, Sydney, NSW 2000. Winners names to be published within 7 days after the draw date on the +Rewards website. Total prize pool valued at $21,000. There is 20 x $1,000 CookwareBrands.com.au eGift Cards prizes and 5 x $200 CookwareBrands.com.au eGift Cards prizes to be won. 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