Digital Finance Analytics (DFA) Blog
"Intelligent Insight"
The Financial Stability Board released a draft discussion paper on the proposed revisions to the capital to be held by Globally Significant Banks GSIBs. The FSB proposes that a single specific minimum Pillar 1 TLAC requirement be set within the range of 16–20% of RWAs and at least twice the Basel 3 Tier 1 leverage … Continue reading “GSIBs Will Likely Need More Capital”
APRA has released Wayne Byre’s speech at the ABF Randstad Leaders Lecture Series on Seeking strength in adversity: Lesson’s from APRA’s 2014 stress test on Australia’s largest banks. He outlines the results of recent bank stress testing, with a focus on the exposure to mortgage lending. Essentially, the tests indicate that whilst capital buffers appear … Continue reading “APRA’s Stress Testing And Bank Optimism”
The CBA advised that its unaudited cash earnings for the three months ended 30 September 2014 were approximately $2.3 billion. Statutory net profit on an unaudited basis for the same period was approximately $2.4 billion, with non – cash items treated on a consistent basis to prior periods. Overall business momentum was maintained. In home … Continue reading “CBA Trading Update Solid”
The results are now in for the last year from the major banks, and combined they delivered more than $28bn in cash profit, higher than the $27bn last year. There are several key drivers of profitability, the first is housing lending. Rises in property prices inflates new loans, and the banks’ balance sheets. If the … Continue reading “Big Four Serve Up $28.6bn Profit”
Nab released full year results to September 2014 today. From the ASX announcement we see: Cash earnings declined to $5.18 billion, which is 9.8% below the September 2013 full year due to earnings adjustments announced on 9 October 2014 relating to UK conduct provisions, capitalised software impairment, deferred tax asset provisions and R&D tax policy … Continue reading “Nab’s Long Winding Road Home”
In a speech in Melbourne, the RBA governor, Glenn Stevens said macroprudential tools could prove useful in helping to control the exuberant housing market. That said, he was still skeptical about their effectiveness. He made the point that whilst monetary policy can’t solve every problem (i.e. interest rates alone) and there may be a need … Continue reading “Macroprudential Tools could prove useful – RBA”
In an important speech given today by Wayne Byres, Chairman of APRA, “Perspectives on the Global Regulatory Agenda”, there are some important pointers which indicate to me that we should expect some changes to the capital regulatory framework quite soon. We highlighted the capital questions recently. Whilst talking about the global agenda, he did confirm … Continue reading “Capital Rules Likely To Be Sharpened”
A cornerstone of banking regulation and control is the application of capital ratios, which acts a brake on their ability to write more loans. The rules are set by the Bank of International Settlement, but they may be interpreted by local regulators, like APRA in Australia to take account of local conditions. BIS has no … Continue reading “The Capital Conundrum”
The RBA today published a discussion paper entitled Is Housing Overvalued? This is an important question, given The Economist (2013) and the OECD (2013) report that Australian house prices are 24 per cent and 21 per cent ‘overvalued’, respectively. The report makes the point cost to income ratios are meaningless unless you know the cost … Continue reading “No Housing Bubble In Australia – RBA”