Leading banks jostle for position on rates
THE sharemarket was dominated by big bank profits and interest-rate cuts yesterday, with financial stocks performing strongly.
THE sharemarket was dominated by big bank profits and interest-rate cuts yesterday, with financial stocks performing strongly.But the benchmark index dropped slightly because investors could not quite shake off a negative lead from Wall Street.The S&P/ASX 200 Index was down 6.9 points at 4429.Analysts suggested things were a little quiet before the federal budget next week, with trading volumes low overall, worth about $4.59 billion.Much of the focus was on the major banks, with National Australia Bank, ANZ and Westpac all posting their half-year earnings this week.Yesterday, Westpac, the country's second-biggest bank, reported its smallest increase in first-half profit since 2009, due to competition for deposits putting pressure on margins.After the Reserve Bank's surprise rate cut, a tussle seemed to break out among the banks yesterday to see which could curry the most favour with customers by passing on a percentage of the cut.Analysts said Commonwealth Bank's decision to pass on 40 basis points was a sign it was taking the fight to NAB, the bank with the lowest standard variable mortgage rates of the majors.After the dust had settled, the league table of variable rates had Westpac charging the highest rate, at 7.46 per cent, followed by ANZ (7.42), CBA (7.01) and NAB (6.99).Westpac shares climbed 22? to $22.91 and NAB climbed 10? to $25.20. Commonwealth was steady at $52.68 while ANZ slipped 16? to $23.64.New data showed beer consumption had plunged to a 65-year low, with the total apparent consumption of alcohol falling for the fourth year in a row."[But] Aussies aren't cutting back on the drink completely as consumption of spirits has lifted," cautioned Savanth Sebastian from CommSec. "Perhaps in the current climate, more people are looking for a good stiff drink."Wesfarmers lost 17? to $30.57 but Woolworths climbed 43? to $26.85.Harvey Norman slid 3? to $2.04 after reporting that pre-tax profit for the first nine months of the financial year dipped 25 per cent.Several other retailers also struggled. JB Hi-Fi fell 14? to $9.40, The Reject Shop dropped 5? to $11.75 and Billabong was 6? lower at $2.54. With the cash rate sitting on 3.75 per cent, the bond market was firmer after investors looked for safety following the release of weak figures from China and the US. The dollar fell about one-third of a US cent to below US103? after the publication of weaker than expected Chinese output.