Share Price Knockdown Game of Last 5 Days: Trends for CBA, NAB, ANZ, WBC, APT, AWC, SXL

Summary

• Australian Banking Association has reported that customers who are expected to remain in financial distress may get an extension of further four months to the current loan deferral period, which ends in September.
• Afterpay has completed equity raising of $ 650 million and is also conducting a share purchase plan to raise an additional $ 150 million. Co-founders of the Company have sold 2.05 million shares each at $ 66 per share.
• Alumina is expected to receive a lower share of AWAC distributions, as partially owned Alcoa has found itself in transfer pricing misconduct, triggering additional tax liabilities, interest and penalties.

Major banks embrace further loan holidays

Australian Banking Association (ABA) has come up with more news on loan deferral scheme launched by the banking industry in the wake of COVID 19 crisis. A large number of retail and business customers, who were in financial distress, have taken the loan holiday.

ABA stated that customers who can manage to repay loans should resume repayments, which would make way for other customers who continue to remain in financial distress due to COVID 19. Since people have started working again albeit experiencing reduced income and financial difficulties, banks will provide such customers with loan restructuring at the end of the moratorium.

At the end of six-month deferral, those ineligible for repayments through loan restructuring would be able to take further deferral of up to four months. During the extension period, customers are expected to work with their bank to find best options.

Related: ASX Banks Losing their Mojo, what are Investors Moot Point?

The four-month additional moratorium is not automatic and is for the customers who are in serious financial distress. Restructuring options are likely to include an extension of loan term, conversion to interest-only payments for some time, debt consolidation, and a combination of these options and other measures.

Customers who would still be unable to make repayments at the end of deferral period would be assisted by banks through their hardship process for the best long-term solution. Credit scores of customers will not be impacted when customers start repayments, enter into a restructured loan or take-up deferral extension, provided they meet the new repayment arrangements.

Commonwealth Bank of Australia (ASX:CBA) last traded at $ 70.560 on 8 July. Over the past five days, CBA was up by 1.95%.

On 8 July, stock of National Australia Bank Limited (ASX:NAB) last traded at $ 17.980. Over the past five days, NAB was down by 1.19%.

Westpac Banking Corporation (ASX:WBC) last traded at $ 17.840 on 8 July. Over the past five days, WBC was down by 0.66%.

Stock of Australia and New Zealand Banking Group Limited (ASX:ANZ) last traded at $ 18.410 on 8 July 2020. Over the past five days, ANZ was down by 0.37%.

Afterpay Limited (ASX:APT)

Afterpay Limited has also joined the ranks of companies raising equity near to their lifetime highs levels. The Company has completed raising $ 650 million in equity through a fully underwritten institutional placement.

New shares were issued at $ 66 per share. The Company also seeks to raise around $ 150 million through a share purchase plan. Afterpay intends to use the proceeds to invest in growing underlying sales and global expansion.

Co-founders, Anthony Eisen and Nicholas Molnar have also sold 2.05 million shares each at a price of $ 66 per share. Sell down by the founders represented 10% of their respective shareholding in the Company. They have committed to not sell further shares until the Annual General Meeting 2020.

APT has delivered a strong performance in FY20 with its underlying sales reaching $ 11.1 billion, up by 112% over the previous year. For FY20, the Company expects merchant revenue margins to be consistent or above than first half FY20 and FY19 margins.

Related: BNPL Buzzing- Sezzle Reports Record 2Q20, Afterpay Reveals Expansion Roadmap & Capital Raising

The Company has also repaid $ 50 million Australian Corporate Bond that would save around $3.6 million per annum on an annualised basis. APT increased its NZ receivable warehouse facility to NZ$ 50 million from NZ$ 20 million and extended term to March 2022.

Afterpay also extended its US$ 200 million receivable warehouse facility to May 2022, and the Company is progressing to secure a GBP 100 million facility for UK receivables with its existing banking partner.

APT last traded at $ 66 on 8 July 2020, down by 2.941% from the previous close. Over the past five days, APT was up by 11.49%.

Alumina Limited (ASX:AWC)

Alcoa is accused of transfer pricing misconduct by the Australian Taxation Office (ATO). It is related to third-party sales made by Alcoa of Australia Limited (AoA) over two decades. Excluding interest and penalties, the proposed amount to be paid by AoA was ~$ 212 million as additional income tax.

After an internal review, the tax authority has sent a notice of approximately $ 214 million, which is ~$ 2 million higher than the company reported number. Notices also include interest amount on the primary tax amount, and ATO plans to invite AoA to provide grounds to support for interest remissions.

ATO is expected to provide information on administrative penalties in August 2020. Consistent with dispute resolution practices, AoA expects to pay half of the amount being $107 million, excluding interest and penalties; this would result in a reduced share of AWAC distributions to Alumina by USD 28 million.

Through the objection and court processes available to AoA, its obligations related to further payment of the primary tax, interest and penalties would be determined. If AoA were to be succeed in dispute, the 50% payment would be refunded by the tax authority, and interest would continue to accrue on unpaid amount during the dispute.

Alcoa, partially owned by Alumina, seeks to defend its position against ATO notices. AWC reported that AoA had paid ~$3.1 billion in income taxes over the past decade in Australia.

AWC last traded at $ 1.590 on 8 July 2020, down by 7.018% from the previous close. Over the past five days, AWC was up by 7.55%.

Southern Cross Media Group Limited (ASX:SXL)

Southern Cross Media Group had reported at the end of June 2020 that it is eligible for the Government’s Public Interest News Gathering program for around $10 million funding. Regional media houses are eligible for the grant.

With its extensive regional radio stations, regional television stream and licences, the Company was eligible for the funding grant. SXL is Australia’s largest regional media business, and the funding would assist the Company’s network of radio stations and television stations.

SXL last traded at $ 0.175 on 8 July 2020, down by 2.778% from the previous close. Over the past five days, SXL was up by 2.86%.

(All currencies in AUD, unless or otherwise stated)