The four giant stocks of banking sector were seen to be dragging the market in the past few days and the trend continued on 25 September 2018. The share price of Commonwealth Bank of Australia (CBA) fell by 1.076% to last trade at $70.80, while Australia and New Zealand Banking Group Ltd (ANZ) was down by 1.26% to $28.220 and Westpac Banking Corporation (WBC) tumbled 1.17% to $27.880. National Australia Bank Ltd (NAB) had shown the slightest drop of 0.433% to $27.60. These stocks were again in red on 26 September 2018, market open.
The decline in these stocks led S&P/ASX 200 index to land up in red, as it was down. It seems investors have been bracing against the bruising impact of Hayne Royal Commission’s interim report on financial services industry which is to be tabled to the federal government at the end of this week.
These headwinds have been coming from the revelations of unlawful activities carried out in insurance/ banking sector companies. In the final day of insurance hearing, Royal Commission heard a litany of misconduct and legal breaches including some of the biggest insurers.
In the grilling of banking sector’s insurance wing, Commonwealth Bank was among the ones who caught fire as Hayne Royal Commission highlighted denials of insurance claims by the CommInsure to its policy holders. This matter came into the spotlight when CommInsure declined a woman’s trauma cover claim for breast cancer stating she did not have mastectomy, which reflected the bank’s failure to update the medical definition of specific terms until 2016. Further, few weeks back Commonwealth Bank was sued by Royal Commission for charging extra fees and paying below standard market rates, lining their own pockets.
The drop in NAB share price appears to stem from the ASIC review in relation to an average number of days taken by the bank to identify the breach. The regulatory body said an average of 1,726 days are taken by the financial institutions to identify, file and compensate the customers for serious issues. It further stated that if it continues to happen, any significant breach that would have occurred today may not come into the notice of financial services firm until 2022. [optin-monster-shortcode id=”wxhmli4jjedneglg1trq”]
As per the ASIC’s review, the National Australia Bank is accused of taking the maximum time to recognize the significant breaches followed by Westpac. Moreover, National Australia Bank was previously sued by Australian Securities and Investment Commission (ASIC) for charging superannuation fees for services not provided. The report revealed that NAB has wrongly charged $100 million of fees from hundreds of thousands of fund members without rendering any financial services or services that they should have given for free anyway.
On the front of ANZ’s decline, market sentiments were seen going lower on the back of rising complaints from ANZ shares trading customers. The latest complaint by investor Chris Petrakis who was trying to log on for two days, highlighted the series of events relating to the poor investors support services offered by Australia and New Zealand Banking Group. ANZ acknowledged the issues with the ANZ Share Investing site and has now indicated for compensations wherever necessary.
While these big four are still fundamentally strong (in view of latest performances), the short term impacts from investigations keep on hovering around.
The Income available from dividends remains attractive for many investors.
We take a look at the best yields on the market and assess what they say about a company’s prospect.
One Thing is certain, though, Australia interest rates are still low, making income difficult to come by and keeping the focus for many investors on high yielding stocks. Kalkine’s team of analysts bought you handpicked report for “Top 25 Dividend Stocks For 2018.”
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