Banks on the nose. Westpac’s confirmation of its record profit and dividend, and some hard words on the immediate outlook from CEO Brian Hartzer, failed to win over investors — so down went the shares by 2.4%. That helped ANZ fall 2.3%, NAB 1.7%, Commonwealth 2.1% and the wider market by 1.4%. That means NAB is now down close to 9% since revealing its results last week, and ANZ is off 8% as worried shareholders have focused on the duo as the banks most exposed to the slowdown. Even Macquarie’s fortunes were clipped by a 4.4% slide yesterday, which came as a surprise. The annual KPMG survey of the big four banks’ full-year results reveal a record combined profit of $30 billion, record dividends, a slight fall in costs, but a drop in return on equity and a further tightening in net interest margin to an average 2.02%, a record low (and NAB is under that at 1.87%). — Glenn Dyer
You pay both ways. Remember the VW emissions rort and 6.7 billion euro cost to fix the problem around the world? Well, VW’s finance chief said late last week that taxpayers in Germany would pay part of the cost because the 6.7 billion can be written off against tax. That means a tax benefit to VW of around 1.5 billion euros (assuming there’s no escalation in the cost). Of course much of BP’s US$20.8 billion settlement to fix the Gulf of Mexico disaster can be written off against tax (around US$15.3 billion). So as the Turnbull government starts softening us up for tax reform (i.e. putting our taxes up and cutting those for the well off), remember how every bad or dopey decision, takeover or investment that generates a loss for business comes off their tax bill, and you all pay.
And on the weekend, Australian governments said they would set up a working party to our emissions standards and testing — gee, that’s a bit late. And by the way, US regulators overnight said they have found at least 10,000 Porsche and Audi luxury models where the emission charting software was installed in cars with engine sizes of 3 litres or more. That’s a new development, and future investigations are underway. — Glenn Dyer
China crackdown continues. According to the Financial Times and a recent edition of The Economist, more than 100,000 people have been found guilty of graft in the anti-corruption crackdown launched in 2012 by Chinese President Xi Jinping. That’s more than 2000 a month! The past few days have brought a spate of arrests and detentions in the financial sector as part of the anti-corruption campaign and the separate (but probably linked) crack down on market rorting flowing from the collapse in the country’s sharemarket in June through August.
In the anti-corruption campaign the most senior banker was snapped up by regulators when Zhang Yun, who is (or was?) president, vice-chairman, and deputy Communist party secretary of Agricultural Bank of China (China’s third largest) was carted away by investigators. That happened on Friday night, according to Chinese media reports. He is not the only banker caught up — in January, the then-president of Minsheng Bank was arrested. And a few days later, a board member at Bank of Beijing was also detained. Arrests have happened throughout the state-owned oil sector as well and throughout the Communist Party, reaching up into the most senior levels in what resembles an old-fashioned Communist purge of the most traditional kind. — Glenn Dyer
Never trust Integrated Whales. And the Financial Times say the former owners of Forbes magazine (the Forbes family and a private equity company) are suing the Chinese purchasers of the magazine, a company called Integrated Whale Media Investments, which is based in Hong Kong. It borrowed money from the Forbes family to pay for the magazine it bought in September 2014, and now refuses to make interest or principal on the reported US$475 million price. The Forbes family says Integrated Whale refused to make the first interest payment on the loan on October 1 last year, and it has been all downhill since then. — Glenn Dyer
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