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Indian banks post earnings, Asian central banks go on policy easing spree


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Indian banks post earnings, Asian central banks go on policy easing spree

S&P Global Market Intelligence offers our top picks of banking news stories and more published throughout the week. Please note that some entries may have links to third-party sources that may require a subscription.

Indian central bank cracks down on late reporting of fraud and other regulatory fines

* The Reserve Bank of India fined nine banks for delayed reporting of fraud, including some that were related to loans to Kingfisher Airlines Ltd. Punjab National Bank and State Bank of India were among those fined for their failure to report in time.

* The central bank also penalized seven local banks for noncompliance with certain provisions. According to the central bank, the penalized banks failed to comply with its provisions including the code of conduct for opening and operating current accounts, among other failures.

* India's Financial Intelligence Unit imposed a 1 million-rupee fine on Indian Overseas Bank for delays in filing certain threshold-based reports.

* The South African Reserve Bank's Prudential Authority imposed a reduced penalty of 400,000 South African rand on the local unit of India-based Bank of Baroda for noncompliance with some provisions of the Financial Intelligence Centre Act.

M&A corner

* Commonwealth Bank of Australia will begin the assisted closure of its Financial Wisdom Ltd. business by June 2020 and will assist advisers in finding alternative arrangements such as self-licensing or joining another financial advice company.

* Higo Bank Ltd. is acquiring a 90% stake in JR Kyushu Financial Management K.K. from Kyushu Railway Group. Higo Bank is acquiring 7,200 JR Kyushu Financial Management shares for an undisclosed sum.

* South Korea's Woori Financial Group Inc. completed the acquisition of Tong Yang Asset Management Corp. and changed its name to Woori Asset Management Corp.

* Malaysia's Hong Leong Bank Bhd. is among a group of investors in advanced talks to buy Asian hospital group Columbia Asia Sdn Bhd., The Wall Street Journal and Bloomberg News reported separately.

CBA posts decline in full-year cash profit and other earnings announcements

* CBA's post-tax cash net profit for the year ended June fell 4.7% year over year due to customer remediation fees, fee removals and risk and compliance costs. The bank posted cash profit of A$8.49 billion, down from A$8.92 billion in the previous year. CEO Matt Comyn recognizes the need to reduce its structural cost base after the disappointing results. Comyn said the bank would tighten discretionary spending, simplify IT architecture and implement a simpler operating model to meet cost-cutting targets.

* Indian banks saw their net profits improve amid falling provisions and contingencies. State Bank of India posted net profit of 29.51 billion rupees for the quarter ended June, compared to a net loss of 42.30 billion rupees in the year-ago quarter, as provisions and contingencies more than halved. Lower provisions and expenses helped Central Bank of India reported consolidated net profit of 1.22 billion rupees for the first quarter, compared to a net loss of 15.16 billion rupees in the prior-year period. Union Bank of India's net profit surged 63.8% to 2.30 billion rupees from 1.41 billion rupees.

* The Philippines' China Banking Corp. posted an 18% year-over-year rise in first-half consolidated profit to 4.2 billion Philippine pesos.

* Japan's Fukuoka Financial Group Inc. said its net income for the quarter ended June surged 807.2% year over year, due primarily to gains totaling ¥117.43 billion on negative goodwill related to the group's acquisition of Eighteenth Bank Ltd. The group's net income increased to ¥128.67 billion from ¥14.18 billion in the prior-year period. Norinchukin Bank reported a 26.7% year-over-year decline in profit for the fiscal first quarter, while Chiba Bank Ltd. posted a 3.9% year-over-year decline in profit for the quarter to ¥14.27 billion, down from ¥14.85 billion.

* Pakistan's United Bank Ltd. reported a 50.6% year-over-year increase in profit for the second quarter to 5.13 billion rupees from 3.41 billion rupees.

* Hong Kong-based Hang Seng Bank Ltd. said first-half consolidated profit rose to about HK$13.66 billion from nearly HK$12.65 billion in the prior-year period.

* New Zealand-based ASB Bank Ltd. reported a 4% year-over-year increase in cash net profit for the fiscal full year ended June 30.

Asia Pacific central banks surprise markets with interest rate cuts

* The Bank of Thailand unexpectedly cut its key interest rate to boost economic growth and revive inflation. The central bank's monetary policy committee decided to cut the rate by 0.25 percentage point to 1.50%.

* Bangko Sentral ng Pilipinas cut the interest rate on the overnight reverse repurchase facility by 25 basis points to 4.25%. The interest rates on the overnight deposit and lending facilities were reduced to 3.75% and 4.75%, respectively. The central bank is expected to reduce policy rates further by 25 basis points at its September meeting.

* The Reserve Bank of India cut its key interest rate to a nine-year low amid weak economic activity, with elevated trade tensions posing downside risks. The central bank cut the policy repo rate under the liquidity adjustment facility by 35 basis points to 5.40%.

* The Reserve Bank of New Zealand surprised markets with a larger-than-expected rate cut as it slashed its base rate by 50 basis points to a new record low of 1%. Markets had largely expected the central bank to trim the official cash rate by 25 basis points.

* The Reserve Bank of Australia left the cash rate at a record low of 1.00% and reiterated its willingness to ease policy further to curb unemployment and bring inflation closer to its target of 2% to 3%.

In other news

* Westpac Banking Corp. will refund NZ$7 million to some 93,000 customers it overcharged on a number of different banking packages.

* CIMB Group Holdings Bhd. closed its investment banking business in Hong Kong, Reuters reported. The group reportedly let go of 10 investment bankers in Hong Kong, leaving only one to oversee the transition.

* Fukuoka Financial Group Inc. will launch Japan's first regional internet-only bank as early as this fiscal year, The Nikkei reported. The new online bank will be called Minnano Ginko, or Everybody's Bank.

* The Reserve Bank of India allowed Bank of China Ltd. and Jana Small Finance Bank Ltd. to offer regular banking services such deposits and loans in the country.

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