(03) 9020 2905Debt Man column – The West Australian (Money)
For: November 2, 2009
Bruce Brammall
Debt Man
Have you got a sordid past you want to disappear? Are there some misdemeanours you’d like zapped from the public record? Is there a festering sore on your reputation that you want erased?
Well, you could write your own version of history. Difficult to get your point across, unless you’re Wayne Carey and people will lap up your book, just because.
Or you could change your appearance.
Walking down the main street of Port Vila in Vanuatu on a short holiday with my family last week, I noticed the new look and logo of a major Australian bank.
While I was away, ANZ rebranded. They’ve now got a face and hands. ANZ wants us to know that “we live in your world”.
We know you do, ANZ. But forgive us for being a little suspicious on the timing. It seems a little Simpsons-esque. Like we’re Scratchy and you’re Itchy and you’re offering us a cheese sandwich that’s laced with acid that will voraciously eat us from the inside.
Like the $A5 “ATM transaction fee” you charged as I took money from the ANZ ATM in Vanuatu. Further, there was a separate $A8.66 charge you took for the same transaction, labelled an “overseas transaction fee”. I took out a little less than $A290. You took 4.7 per cent of that.
I’ll say you live in my world. You’re literally in my back pocket, mooching. You’re effectively on payroll.
I’m an ANZ customer in Australia. Given the quantum of loans that you’d expect Debt Man would have, I would like to think I’m a reasonably valuable customer of theirs.
So what do they slug customers who don’t pay two sizeable annual fees, plus a gazillion dollars in mortgage-backed loan interest each year?
In ANZ’s press release to announce the new brand, they listed the recent removal of 27 fees on personal accounts as a “recent or planned” initiative.
Seriously? How can there be more than 27 fees on personal bank accounts? Are there really that many things you can do with a bank account that you could be smacked for? I don’t think I ever found that many reasons to fight with my brother Dirk as a kid.
So ANZ wants a clean reputational slate – a new look to go with the new fee regime and a promise not to raise rates more than the Reserve Bank (which is more than their competitors have done).
All this just ahead of the big bank annual reporting season, which started last week.
Despite some big writedowns and the GFC, NAB announced a $2.59 billion profit, down 43 per cent. They lost money in the second half of their year. ANZ followed the next day with a profit of $2.94 billion, down 11 per cent. Westpac and Macquarie will have their turn later this month.
Falling bank profits are far better than bankruptcies – all the rage in the US and Europe. The long-term investment case for Australia’s banks still seems strong.
But Australia’s banks currently have fewer mates than a bout of gastro in a creche. Politicians are shaking their fingers. Punters fear the lack of competition.
Research houses are also down on them. Stockbrokers and financial advisers, who need to back up their recommendations to clients with research, will struggle to find recommendations resembling “buy” for banks.
For example, Lonsec has all four major banks on “hold”. Therefore, most brokers/advisers cannot recommend their clients buy bank shares – which make up roughly 25 per cent of the index. It’s not just Lonsec. Few analysts anywhere would shout a drink for a bank.
So, while recommendations to own Australian banks are a bit light on (and I’m not recommending them here), the lure to invest in them is still strong.
Despite dividends being reduced by 25-30 per cent, Australia’s banks still pay huge income to shareholders. They don’t currently have any competition. Sure, they’ve written off a few debts, but it’s collateral damage from the GFC. Like the end of Liz Hurley and Hugh Grant, after his Divine moment.
But in the short term, the problem could be that banks, like the broader market, probably need to take a breather after most had doubled in price since March.
Good luck doubling your money on the Melbourne Cup tomorrow. And hopefully we don’t get a double interest rate rise just before the race starts.
Bruce Brammall is the author of Debt Man Walking (www.debtman.com.au) and a licensed financial adviser. bruce@debtman.com.au . He owns shares in several major Australian banks.