ANZ profit to tumble
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The ANZ Bank announced that their profits are likely to tumble in the vicinity of 15% for the first half amid increasing debt provisioning and risks associated with derivatives.
The ANZ along with all the other banks are being hit with increasing levels of bad and doubtful debts which are causing a dramatic increase in debt provisions amid the global economic slowdown.
Bank of England rates now 1.5%
The Bank of England cut rates by 50 basis points to 1.5% in what is becoming the worst economic slowdown since the Great Depression of the 1930s.
The UK has been harder hit than most amid a dramatic slowdown in consumer spending, negative economic growth and falling housing prices.
NAB, Commonwealth & St George join in cutting rates
The National Australia Bank (NAB), Commonwealth Bank and St George joined Westpac and ANZ today by announcing rate cuts to their standard variable rates.
All major banks have now passed on the full 100 basis point cut to consumers.
NAB and Commonwealth have slashed their rates to 5.74% while St George have lowered their rate to 5.89%, the rate changes are effective from 13 February.
NAB and Commonwealth were at pains to point out that future interest rate cuts by the RBA may not be passed on in full to consumers as the demands and pressures on bank margins continue.
Commonwealth Bank in profit upgrade
The Commonwealth Bank surprised the market with a profit upgrade of 20% above market expectations and announced a likely profit of around $2 billion for the half.
The announcement comes on the back of strong credit growth and strong deposit growth. The profit announcement due on 11 February is still likely to be about 16% less than the previous profit of $2.38 million for the December 2007 half but indicate the negativity towards the banks in the market.
The Commonwealth Bank share price surged today on the positive news.
Westpac and ANZ first to cut
Westpac became the first of the banks to cut rates after the RBA announced a cut of 100 basis points to reduce the cash rate to 3.25%.
ANZ followed shortly after announcing a full cut of 100 basis points just like Westpac.
The ANZ and Westpac have lowered their rates to 5.91%. The ANZ announced the cut will take effect from 13 February and further cuts will be passed on subject to funding costs.
As at the time of posting the Commonwealth Bank and NAB have not announced a rate cut..
RBA cut rates by 100 basis points
The Reserve Bank of Australia cut rates by 100 basis points today to take the official cash rate to 3.25%. The cut comes on the same day as Prime Minister Rudd announced a $42 billion fiscal stimulus aimed at short and long term benefit to stimulate the Australian economy and protect jobs.
The RBA have now cut the cash rate by 300 basis points since September 2008 to the lowest point since 1964.
Next month is not likely to see as greater cut as those of recent months as the RBA look towards the Government’s fiscal stimulus to kickstart the domestic economy from the global turmoil inflicting markets.
RBA to slash rates
The Reserve Bank of Australia is expected to slash rates by 100 basis points this week as the Australian economy is in recession and looking down the barrel of a world economy that has badly derailed.
With the world in recession the RBA will need to act swiftly to reduce interest rates in a move to boost domestic growth and inspire confidence in a domestic economy that badly needs a boost amid rising unemployment and falling consumer spending.
With inflation no longer the problem, that it has been in recent years, the brake is no longer on Glenn Stevens allowing him to act decisively to boost domestic growth. The Australian government are also likely to support the domestic economy with another rescue package expected to be announced in coming days.
Australian Bank Watch will announce the rate cut when announced this week.
NZ slash rates by 1.50%
The Reserve Bank of New Zealand slashed rates by 1.50% to 3.5% in a desperate attempt to pump life into the severely faltering New Zealand economy.
The action by the Reserve Bank Governer of New Zealand is in direct response to the state of the world economy being in recession. The cut brings the official cash rate down by 4.75 since July 2008 to a record low since the introduction of the offical cash rate in 1999.
The cut which caught analysts unaware surprised the market who were expecting a cut of 100 basis points. Future NZ rate cuts are likely to be smaller indicating the lack of margin the RBNZ have to make a material impact on the economy going forward.