Do you know that according to some market experts, Australia has had the best performing share market across the globe from 1900 to 2009 period, including the terse phases of the Internet Bubble and Global Financial Crisis, reporting a 7.5 per cent after-inflation returns per year? Thus, it can be safely stated that the Australian Share Market is a confluence of great trading, numerous listings and contemporary technologically advanced stocks. However, driven by the dynamic syndrome of business, the stocks face the Bull market (rising stock prices) and Bear market (falling stock prices) surrounding at times.
Let us now look at the performances and updates of the three financial stocks, listed and trading on the Australian Securities Exchange:
AMP Limited (ASX: AMP)
Company Profile: A wealth management company founded almost 170 years ago, AMP focusses on providing solutions and services across financial advice, investing, investment management, banking, superannuation, SMSFs, life insurance and retirement income. The company trades both on ASX and NZX and is operational in 11 countries across Asia, the Middle East, Europe, the UK, Australia and North America. The company was listed on ASX in 1998 and has its registered office in Sydney.
Stock Performance: On 16 July 2019, the company’s stock was trading flat at A$1.81 on ASX (at AEST 12:34 PM), with 2.95 billion shares and a market capitalisation of A$6.33 billion. AMP’s annual dividend yield has been 6.51% and the YTD return is a negative 11.89 per cent. Also, in the last year, the stock has given a negative return of 40.61%.
AMP’s stock performance since February 2019 (Source: ASX)
AMP Life Sale Update: On 15 July 2019, AMP announced that the sale of its Australian and New Zealand wealth protection and mature businesses, AMP Life, to Resolution Life is most likely to cease from proceeding, given the challenges being faced in the meeting with the Reserve Bank of New Zealand’s approval of a change of control. This would take place only if Resolution Life agrees to possess an independent and ringfenced assets held in New Zealand for the New Zealand policyholders.
Given the situation, the company is scrutinising the possibility of a solution that meets policyholder interests, regulatory needs and provides a certainty of execution. This would require a reframed negotiation and remains uncertain.
Interim Dividend Update: The company anticipates reporting a Level three entitled capital surplus over the least regulatory requisites and in sync with limits of the Board towards the aimed capital surplus. Given the uncertainty and most likely non-occurrence of the AMP Life transaction, the company’s board would not be disbursing an interim dividend for 1H 19 period.
Becomes Substantial Holder: On 15 July 2019, AMP disclosed that pursuant to Section 671B of the Corporations Act, it has become a substantial holder in Ingenia Communities Group with 13,131,370 securities/persons’ votes and voting power of 5.56%, effective 12 July 2019.
Bendigo and Adelaide Bank Limited (ASX: BEN)
Company Profile: With existence dating back to 1858, BEN is Australia's fifth largest retail bank and has assets under management over $71.4 billion. BEN provides banking and other financial services, including retail banking, superannuation, advisory and trustee services, mortgage distribution, business lending, margin lending, business banking and commercial finance, invoice discounting, funds management, treasury and foreign exchange services. The company’s head office is in Bendigo and it was listed on the ASX in 1985.
BEN’s Brands (Source: Company’s Website)
Stock Performance: On 16 July 2019, the stock of BEN was trading at A$11.425, edging up by 0.219 per cent (at AEST 12:57 PM), with ~491.58 million outstanding shares. The market capitalisation of the company is A$5.65 billion and its annual dividend yield is 6.09%. The YTD return of the stock stands at 9.53 per cent and in the last three and six months, the stock has delivered returns of 19.31 per cent and 5.32 per cent, respectively.
New on Board: On 30 May 2019, the company announced that Jacqueline Hey would succeed Robert Johanson, post his retirement, to be the BEN’s new Chair at the company’s Annual General Meeting, which would be held on 29 October 2019.
Prudential Information in accordance with Prudential Standard APS 330: BEN is an ADI and subject to APRA’s regulation. A Basel III Pillar 3 Disclosure was provided on 24 May 2019, stating the bank’s details. It was stated that BEN has been maintaining the daily LCR requirement in line with the regulatory minimum. The Average liquid assets for the March quarter stood at $7,891.6 million (as on 31 March 2019).
BEN’s Capital Adequacy (Source: Company’s Report)
IOOF to acquire BEN’s FP client book: In April 2019, the market was notified that IOOF Holdings Ltd (ASX: IFL), along with its subsidiary Bridges Financial Services Group Pty Ltd would take ownership of Bendigo FP’s client book and servicing rights and cater to the financial planning services to the clients of BEN. The transaction is worth $3 million on completion and is due to conclude on 31 July 2019.
CYBG PLC (ASX: CYB)
Company Profile: An independent banking group together working as trusted brands of Clydesdale Bank, Yorkshire Bank, B and Virgin Money, CYB offers a diverse range of financial products and services for individuals and businesses. The company trades on the LSE and the ASX and was registered on the ASX in 2016. CYB’s registered office is in Sydney.
The 4 unique brands of CYB (Source: Company Website)
Stock Performance: On 16 July 2019, the stock of CYB was trading at A$3.61, down by 1.096 percent (at AEST1:15 PM), with ~1.43 billion outstanding shares. The market capitalisation of the company is A$5.16 billion and its annual dividend yield is 1.54%. The YTD return of the stock stands at 10.43 per cent and in the last one and six months, the stock has delivered returns of 8.43 per cent and 10.09 per cent, respectively.
Capital Markets Day 2019: On 19 June 2019, the company announced its refreshed strategy and updated medium-term strategic and financial targets. It stated that the completion of the full integration of Virgin Money would enable a digital and improved customer experience for the group’s clients. The FSMA Part VII approval required to enable this is likely to take place by the end of October 2019. Post this, the group would be known as Virgin Money UK PLC, with re-branding and re-launch to commence towards the end of 2019.
The four new strategic pillars of the company would be pioneering growth, enhancing both the customers and colleagues experience, realising significant integration synergies and maintaining a disciplined approach.
The company confirmed its 2019 guidance to range between 165-170bps NIM. c.£200 million of net cost savings by FY22 is being targeted and the operating costs would be less than £780m by FY22. The company would be targeting less than 30bps cost of risk through FY22 and a CET1 capital ratio of c.13 per cent. Statutory RoTE would be over 12 per cent by FY22 and excess CET1 capital generation per annum by FY22 would be over 100bps. The company would pay c.50 per cent pay-out ratio over time.
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