Tag Archives: Banking & Investment Services (TRBC level 2)

Australia’s 4-ANZ UPDATE weighs on excess returns on capital as profits multiply from virus slump | Instant News


* H1 gains driven by bad debt provision for refund

* Hike interim dividends, consider more payouts

* Set target to reduce annual costs to A $ 8 billion by 2023

* Australian banks are recovering fast from the COVID slump (Added CEO quotes, cost reduction goals, stock transfers)

SYDNEY, May 5 (Reuters) – The Australian and New Zealand Banking Group (ANZ) said it would consider a return on equity to shareholders as first-half profit more than doubled, driven by the release of funds previously set aside to cover potential COVID. -19 losses.

Australian banks are recovering from the pandemic earlier than their global counterparts, as the country’s success in controlling the virus combined with near-zero interest rates and high government spending boosts consumer confidence and the housing market.

As a result, ANZ and its larger domestic counterparts have rewritten provisions since February, were among the first banks in the world to forgo reserves that hurt their profits last year.

ANZ’s cash profit increased to A $ 2.99 billion ($ 2.3 billion) for the six months ended March 31 from A $ 1.41 billion last year. This released the A $ 491 million that previously charged the provision of bad debts to profit for half a year, a sharp rebound from the A $ 1.67 billion cost needed last year.

Australia’s fourth-largest bank said its large capital position meant it could now increase its interim dividend to 70 cents a share, from 25 cents last year, and would assess an option to return about A $ 7 billion in additional capital to investors.

“We are sitting at record capital levels. The money is of no use to us other than a sense of security and caution in times of uncertainty, ”said Chief Executive Officer Shayne Elliott.

He said, however, that the bank was still approaching the decision with caution.

“We need greater clarity about the economy,” Elliott said on the revenue call, noting the government’s COVID-19 wage subsidy expired just five weeks ago and banks are still studying their impact on unemployment.

Australia’s second-largest lender Westpac Banking Corp reported earlier this week first-half cash earnings more than tripled from a year ago, also boosted by the release of previously issued bad debt terms.

“The benefits of lowering the credit score are significantly better than we expected. “Many markets are happy with this result, and many will result in a further increase in confidence in the prospects of big banks,” said Azib Khan, a banking analyst at Morgans Financial.

The National Australia Bank reports interim earnings on Thursday, while the largest of Australia’s so-called Big Four, the Commonwealth Bank of Australia (CBA), has a different fiscal calendar and updates markets on its first quarter results next week.

ANZ said it would aim to reduce costs to A $ 8 billion per year by fiscal 2023, a year earlier than Westpac’s similar goal.

Shares of ANZ, which in the past two and a half months have rallied over their Big Four rivals, fell 1.8% on Wednesday. Analysts said as investors switched to CBA, it was slow over the same period, it raised its stake by 2.3%.

Melbourne-based ANZ’s common equity tier 1 (CET1) ratio, the main measure of cash reserves, rose to 12.4% at end-March from 11.3% on Sept. 30 ($ 1 = Australian $ 1.2960)

Reporting by Paulina Duran in Sydney; Additional reporting by Sameer Manekar in Bengaluru; Edited by Sam Holmes, Stephen Coates and Muralikumar Anantharaman

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UPDATE 3-Italy considering extending tax breaks for bank mergers, bad loan sales | Instant News


* Tax relief is seen as the key to bank consolidation in Italy

* The draft bill was extended in size by six months, increasing the size

* Tax relief for bad loan sales can also be extended (Added analyst calculations, stock reaction)

ROME, May 4 (Reuters) – Italy is considering extending to mid-2022 a tax break that is expected to spur mergers in the fragmented banking sector, while increasing incentives for any ties, a draft decree shows.

The draft bill seen by Reuters reintroduces current-year tax benefits for companies releasing damaged loans that expired in December.

Both measures, if confirmed, will help Italian banks cope with the impact of the pandemic, which will spark bad credit and further hit bank profits once the government releases support measures for the economy.

In this regard, the government is considering providing state guarantees for bank loans to companies and a debt holiday scheme, with only interest payments continuing after June.

The tax breaks for corporate mergers, which expire in December, are a key part of the incentive package that the previous Italian government has put in place to convince the country’s number two bank, UniCredit, to take over losers Monte dei Paschi (MPS).

Negotiations for the state-owned MPS hit a dead end due to a change of CEO at UniCredit, which Andrea Orcel last month took over from French banker Jean Pierre Mustier.

The proposed changes extend the timeframe for a possible merger and give banks greater incentives to join forces and shore up profits through cutting costs.

The draft decree proposes to increase the tax relief limit to 3% of the assets of the small companies involved from the current 2%.

The Bailed MPS said in March the current move, which allows companies to join forces to turn past losses into tax credits, would require a profit of 2.2 billion euros ($ 2.6 billion) for buyers.

Equita analyst Andrea Lisi estimates the new scheme will mean a 3.4 billion euro increase for UniCredit if it takes over MPS.

Lisi said the bounty would increase to 3.6 billion euros in a bond between UniCredit and Banco BPM, Italy’s third-largest bank which is widely seen as a potential alternative takeover target for UniCredit.

MPS shares rose 5.8% on Tuesday outperforming a 0.8% gain in the Italian banking index.

The cost to the state treasury will be up to 1.05 billion euros spread over three years, the draft decree said.

This would cost the country another 1 billion euros over the same period to extend the tax incentives for the release of bad loans for another year, which the bill says could generate sales of 17 billion euros this year, with 10 billion euros from banks.

The Bank of Italy said the tax breaks helped banks issue 33 billion euros in non-performing loans last year.

Ministers in Mario Draghi’s government are expected to discuss the decision, which is subject to change, at a cabinet meeting on Friday, government sources said.

Lawmaker Giovanni Curro told Reuters his ruling party with the 5-Star Party would ask parliament to change the measures, if approved, to curb incentives.

$ 1 = 0.8333 euros Reported by Giuseppe Fonte in Rome and Valentina Za in Milan; Edited by Gavin Jones, Alexander Smith and Edmund Blair

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UPDATE 1-Itau beat Brazil’s estimate on lower terms, trading gains | Instant News


(Adds return on equity, loan book)

SAO PAULO, May 3 (Reuters) – Brazil’s biggest lender, Itau Unibanco Holding SA, on Monday reported better-than-expected first-quarter profit, as loan loss provisions for bad loans fell and trading profits rose.

Recurring net income, which excludes one-time items, was 6.398 billion reais ($ 1.18 billion), more than 11% above the 5.753 billion reais forecast compiled by Reuters and 63.6% above the prior year result.

Provisions are down 59.2% from last year, when Itau set aside billions of reais to cover potential losses caused by the coronavirus pandemic.

The drop in provisions suggests that the bank believes that the brutal second wave of pandemic Brazil is experiencing will not lead to further asset quality deterioration in the coming months.

The 90 day default ratio remained stable at 2.3%, despite higher loan arrears with smaller firms.

The lender’s net interest income also rose 4.7% from a year earlier, to 18.634 billion reais, driven by trading gains as yields with clients fell.

The return on equity rose to 18.5% from 12.8% last year, and is also above the previous quarter.

$ 1 = 5,4395 reais Reporting by Carolina Mandl / Editing by Leslie Adler and Sam Holmes

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Italy wants to extend the tax incentives for bank mergers, raise the limit | Instant News


ROME, May 3 (Reuters) – Italy is considering extending to mid-2022 tax breaks aimed at spurring ties in the country’s fragmented banking sector, a draft decision seen by Reuters shows.

The tax breaks, which currently expire at the end of this year, are a key part of the incentive the government has been trying to convince Italy’s No.2 bank, UniCredit, to take over its losing rival Monte dei Paschi.

The draft decree also proposes increasing the size of the incentives by setting a tax relief limit of 3% of the assets of small companies involved in the merger, from 2% currently. (Reporting by Giuseppe Fonte and Valentina Za; editing by Gavin Jones)

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UPDATE 2-Italy considering extending tax breaks for bank mergers, bad loan sales | Instant News


* Tax relief is seen as the key to bank consolidation in Italy

* The draft bill was extended in size by six months, increasing the size

* Tax relief for bad loan sales can also be extended (Adding details)

ROME, May 3 (Reuters) – Italy is considering extending to mid-2022 a tax break that is expected to spur ties in a fragmented banking sector, while also increasing the size of incentives, a draft decision seen by Reuters showed on Monday.

The bill also reintroduces current-year tax benefits for companies that lost loans maturing in December.

Both measures, if confirmed, will support Italian banks in the face of the impact of the pandemic, which will spark bad credit and further hit bank profits once the government releases support measures for the economy.

In this regard, the government is considering providing state guarantees for bank loans to companies and a debt holiday scheme, with only interest payments continuing after June.

The tax breaks for corporate mergers, which expire in December, are a key part of the incentive package that the previous Italian government has prepared to convince the country’s number 2 bank UniCredit to take over the losers’ Monte dei Paschi (MPS).

Negotiations for the state-owned MPS hit a dead end due to a change of CEO at UniCredit, which Andrea Orcel last month took over from French banker Jean Pierre Mustier.

The proposed changes extend the timeframe for a possible merger and give banks greater incentives to join forces and shore up profits through cutting costs.

The Bailed MPS said in March that the current move, which allows companies to join forces to turn past losses into tax credits, would require a profit of 2.2 billion euros for buyers.

The draft decree proposes to increase the tax relief limit to 3% of the assets of the small companies involved from the current 2%.

The cost to the state treasury will be up to 1.05 billion euros ($ 1.3 billion) spread over three years, the draft decree said.

This would cost the country another billion euros to extend tax incentives for the release of bad loans for another year, which the bill says could result in sales of 17 billion euros this year, of which 10 billion come from banks.

The Bank of Italy said the tax breaks helped banks issue 33 billion euros in non-performing loans last year.

Government minister Mario Draghi is expected to discuss the decision, which is subject to change, at a cabinet meeting on Friday, government sources said. ($ 1 = 0.8297 euros) (Report by Giuseppe Fonte and Valentina Za; Editing by Gavin Jones and Alexander Smith)

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