Banking Royal Commission’s Final Report: What Does This Mean for Banks?

As the market players are aware, the date with respect to the final report of The Banking Royal Commission is fast approaching and it could be a very crucial time for the companies as well as for the market players. Since the final report would be of utmost importance to the market players, it can be assumed that the market players have already started assuming that what might be there in the final report. As we know, the lenders need to carefully analyse and understand the profile of the borrower. However, Mr. Kenneth Hayne’s Interim Report suggested that the lenders were not taking adequate steps event though they possess the details which could provide the broader picture of the applicants. Therefore, there are expectations that the report might include information related to the lending procedures which might make the process of verification strict.Â

Also, as reflected in the Hayne’s interim report, there happen to be some issues with the trends which are being followed for the payment of the bonuses. The interim report reflected that this was a primary concern which has been prompting the unethical practices throughout the financial sector. Therefore, the market players are also concerned about the information which might be present in the final report related to the remuneration. The top management of Westpac Banking Corporation (ASX: WBC) had also thrown light on the concerns in the annual report for FY 2018. The top management has added that the entities which are in the business of the financial services did witness some challenges. The bank’s management had also stated that the broader sector was under check. Westpac Banking Corporation had also mentioned some of the challenges in its presentation related to FY 2018. The bank stated that the challenges which were encountered relate to the regulatory actions as well as slowing system credit growth. However, other challenges which were mentioned by the bank in its presentation were related to the customer remediation and increased the cost of funds as well as bank levy’s full-year impact. However, the top management of the bank had also stated that they have maintained their focus towards serving the customers.

We would now have a look at the performance of Westpac Banking Corporation from the past few months. On January 25, 2019, WBC closed the session in green and the stock price closed at A$25.880 per share which implies the rise of A$0.160 per share or 0.622% on the intra-day basis. The market capitalization of Westpac Banking Corporation stood at ~$88.67 billion. However, in the past 3 months and 6 months, the bank’s stock had delivered the return of 0.15% and -11.55%, respectively.

Therefore, it can be assumed that as the date of the final report of The Royal Commission is fast approaching the market trackers are already thinking what could be there in it. Moreover, the market trackers should also understand and analyse what changes could bring on the investors or on the borrowers.


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