Financial Industry 03 (Oct 10 - Mar 12)

[winston]

Bank Earnings Jump 57% in Analyst Forecasts Proved Wrong in 2011

Analysts’ failure to foresee declining earnings per share for the biggest U.S. banks last year hasn’t stopped them from predicting an even bigger profit surge for 2012.

http://www.bloomberg.com/news/2012-01-0 ... -2011.html

[winston]

by iam802 :-

RBS Sees 5,500 Job Losses from Restructuring

http://www.bloomberg.com/news/2012-01-1 ... ities.html

Royal Bank of Scotland Group Plc, Britain’s biggest government-owned bank, will cut 5,500 jobs at its investment bank as it exits cash equities and mergers advisory.

RBS plans to sell or close the units along with corporate broking and equity capital markets, it said today in a statement. The lender said it is in talks with “a number” of potential buyers.

Hester is reversing a decade of expansion led by former CEO Fred Goodwin up to 2008 that included $140 billion of acquisitions. The Edinburgh-based lender is expanding on Hester’s 2009 review, since which he has cut the bank’s assets by about 1 trillion pounds ($1.54 trillion) and made plans to sell operations including aircraft leasing and retreat from some markets in Asia

“Our goal from these changes is to be more focused for customers, more conservatively funded, more efficient and with better, more stable returns for shareholders overall,” said Chief Executive Officer Stephen Hester, 51, in the statement.

[winston]

Singapore Banks

Deutsche Bank said in a report on Thursday, that despite the challenging near-term outlook due to persistent macro uncertainties, it still has a positive view on Singapore banks on the back of attractive valuations and solid balance sheets.

Credit costs are unlikely to approach the peak of 98 basis points reached in 2009, Deutsche said, adding that unlike other markets in the region, Singapore is not expected to see futher material declines in interest rates in 2012 due to the already low levels.

Source: Reuters

[winston]

Fund managers in firing line as crisis exposes flaws By Sinead Cruise

LONDON (Reuters) - Fund managers face redundancies, as upheaval caused by the financial crisis reveals poor returns, low skills and overpriced products that are driving clients away.

Boutique managers running less than 2 billion euros in assets are also facing a battle for survival, the experts said, as funds under 300 million euros in size are now broadly seen as unprofitable and inefficient to run.

The combined assets of the investment fund market in Europe fell by 5.4 percent in Q3 2011 to 7,667 billion euros compared with 8,142 billion at December 31 2010, the latest data from the European Fund and Asset Management Association (EFAMA) shows.

Managers now need to be as comfortable shorting stocks as picking long-term winners as demand for absolute return ramps up. They may also need to feel comfortable articulating strategy to clients using tools like Twitter, often on a daily basis.


http://sg.finance.yahoo.com/news/fund-m ... 11568.html

[winston]

Weekly Review

The financials were knocked back on JPM's numbers.

Next week there is a basket full of earnings. That includes WFC, one of the nice performers in this group. It has not just been the big names, but the regionals such as STT. It was performing quite well. They all got knocked back on Friday, but it was nothing major.

We will look for a little more test, and maybe the earnings season in these stocks will give them more of a test.

Next week, a lot of these will report, as noted. After that, maybe they could have the impetus to move to the upside.


Source: Investment House

[winston]

The Global Elite Are Hiding 18 Trillion Dollars In Offshore Banks

In recent days, the fact that Mitt Romney has millions of dollars parked down in the Cayman Islands has made headlines all over the world. But when it comes to offshore banking, what Mitt Romney is doing is small potatoes.

The truth is that the global elite are hiding an almost unbelievable amount of money in offshore banks. According to shocking research done by the IMF, the global elite are holding a total of 18 trillion dollars in offshore banks. And that figure does not even count any money being held in Switzerland.

That is a staggering amount of money. Keep in mind that U.S. GDP in 2010 was only 14.58 trillion dollars.

http://www.yolohub.com/economy/the-glob ... hore-banks

[winston]

HK Banking Sector

Hong Kong banking industry is closely related to global economy, particularly the international banks such as HSBC (0005),
Standard Chartered Bank (2888) which is more likely to be affected by global economic change.

However, the influence of Europe debt crisis will affect the banking industry in 2012- a tough year, mainly due to the global banking systemic risk will gradually increase.

Inefficiencies of euro zone leaders consultation mechanism, the European debt crisis will be peak in this year, we expect at least have a euro-zone countries from the euro zone.

It must be a negative impact to the global banking system, triggering a chain reaction, the interbank liquidity stagnation is expected, especially in Europe and the U.S. banks bear the brunt, the impact will like a replica of the U.S. subprime mortgage crisis.

Continuing debt crisis in Europe, we recommend investors to invest in local financial stocks with high dividend.

First rank is BOC Hong Kong (2388) with a unique concept of RMB business , second is Hang Seng Bank (0011) with stable dividend.


Source: Phillips

[winston]

China's banking sector

Benefited from China's stable economic growth in 2011, the profits of China's banks still kept strong increase, as at the end of 3Q2011, average year-on-year growth rate of all Chinese listed banks` net profits achieved to 31.8% approximately.

In this report, we mainly focus on 9 domestic listed banks in HK, and according to IFRS, accumulated net profits of 9 domestic banks increased by 36.6% yoy in average, the banks` performances were better than our previous expectation.

Due to the sharp increase of loans in the last two years, the liquidity of the banks` capital has reduced obviously, the capital pressures increase and meet huge demand of financing, representing the potential deterioration of asset quality in the future.

In all, although the effects of European debt crisis are expanding, we believe the banks` profits would continue to increase stably in the next two years under the precondition of current stable growth of China's economy, the banks` capital demand would increase and the asset quality might deteriorate.

However, considering the stable prospects of banks` performance in the near future, and their current valuation locate close to the bottom peak, the stock performance were better than the most of sectors, therefore we still hold an optimistic view on the performance of domestic listed banks, and upgrade the sector to Outperform.


Source: Phillips

[iam802]

Financial job loss (continues)

If the Finance industry is cutting jobs, is it possible for the overall economy to be booming?

And if these companies are scaling back, can companies like SGX be growing?

--
Daiwa, Mizuho Trim at Least 500 More Jobs

http://www.bloomberg.com/news/2012-01-3 ... -jobs.html

Daiwa Securities Group Inc. (8601) and Mizuho Financial Group Inc. will deepen job cuts by trimming an additional 500 positions, reversing an expansion aimed at challenging Wall Street firms as Europe’s debt crisis persists.

Daiwa said yesterday it will trim 200 positions overseas after posting a fourth straight quarterly loss, while Mizuho plans to eliminate 300 more jobs at its brokerage arm following an 80 percent decline in the bank’s third-quarter profit. Samsung Securities Co. (016360) also plans to cut staff at its 100-person Hong Kong unit by more than half, it said today.

Asian financial firms are trimming costs as the contagion from Europe’s sovereign debt crisis, which has forced global rivals to announce more than 230,000 job cuts in the past year, spreads to the region. Japan’s biggest banks are also seeking ways to offset declining loan profitability as an export slump and stronger yen threaten an economic rebound at home.

“It’s wrong timing for the Asian firms,” Sandy Mehta, chief executive officer for Hong Kong-based Value Investment Principals Ltd., said by telephone. “I think you’ll see more scaling back by the brokerage firms basically because of poor investment banking business, share trading and IPO business. Everyone here is scaling back.”

Daiwa shares fell 1.1 percent to 271 yen at the 11 a.m. break in Tokyo Stock Exchange trading. Mizuho rose 0.9 percent to 116 yen. Japan’s benchmark Topix index rose 0.6 percent. Samsung Securities, South Korea’s largest brokerage by market value, climbed 2.6 percent to 62,900 won in Seoul.

Cut-Throat Competition

Samsung Securities will suspend brokerage services for Hong Kong shares as of today and reduce the unit’s research and sales workforce, according to an e-mailed statement. The office is the firm’s largest outside Korea.

“It may be a smart move for Samsung to retreat from Hong Kong’s cut-throat competition,” said Sohn Mi Ji, a Seoul-based analyst at Shinhan Investment Corp. “It needs to trim losses from the unit, which hasn’t been covering expenses.”

The firm may resume its Hong Kong operations when market conditions change, it said.
Daiwa’s net loss totaled 21.6 billion yen ($283 million) for the three months ended Dec. 31, compared with a profit of 1.2 billion yen a year earlier, the Tokyo-based brokerage said in a statement. The average estimate of seven analysts surveyed by Bloomberg was for a loss of 14.2 billion yen.

Chief Executive Officer Takashi Hibino, who took the post in April, is cutting jobs in Europe and Asia and trimming executive pay to cope with losses in those regions.

’Right Direction’

The brokerage in October said it would cut 100 positions in Asia outside of Japan and 200 jobs in Europe to save 40 billion yen a year. It also said Hibino and other top Daiwa executives will take pay cuts of as much as 40 percent until the end of March.

“While we’re not sure the cost cuts are enough, it’s still significant and moving in the right direction,” said Shiro Yoshioka, an analyst at Japaninvest Group Plc (3827) in Tokyo. “It’s uncertain at this point whether Daiwa can boost its top line under these market conditions.”
Revenue slid 21 percent to 92.9 billion yen for the three months ended Dec. 31 from a year earlier, led by a drop in trading income and brokerage commissions.

Trading profit plunged to 8.6 billion yen from 31.6 billion yen, the brokerage said. Commissions fell to 8.2 billion yen last quarter from 12.5 billion yen a year earlier. Equity and bond underwriting fees rose to 8.1 billion yen from 7.5 billion yen.

Worldwide Reductions

Daiwa’s headcount fell to 15,214 from 15,592 three months earlier, according to the statement. Job cuts abroad now total 500 and will help save the company about 60 billion yen a year. Daiwa said it plans to complete the reductions by the end of March.

Financial firms are cutting expenses as revenue from investment banking declines amid stricter regulations and Europe’s debt woes. Citigroup Inc. (C), the third-biggest U.S. bank by assets, last month announced 1,200 job reductions to save $600 million this year at its securities and banking division.

The latest announcement takes job cuts at Mizuho’s securities unit to 1,000 for the year ending in March. The bank yesterday said that it will also close 10 domestic branches for the division by May to cope with a “protracted severe management environment.”

Mizuho Securities Co. posted a loss of 36.7 billion yen for the three months ended Dec. 31, the unit’s biggest quarterly loss in at least five.

Japan Challenge

The positions being cut at Mizuho Securities are separate from the parent company’s plans, announced in November, to eliminate 3,000 positions by March 2016 through the merger of its corporate and retail lending units, said Masako Shiono, a Tokyo-based spokeswoman for the banking group.

“There’s a risk that Japan’s loan market will resume a downward trend depending on the nation’s economic growth, forcing the megabanks to increase lending overseas,” Natsumu Tsujino, an analyst at JPMorgan Chase & Co. in Tokyo, wrote in a note on Jan. 27. “Mizuho may have the best chance among the three banks to improve profitability given the substantial cost reduction expected from” the merger, Tsujino said.

Mizuho Financial Group’s net income dropped to 16.3 billion yen in the quarter ended Dec. 31 from 80.3 billion yen a year earlier. Quarterly earnings were calculated by subtracting first-half profit from nine-month figures reported in a statement yesterday.

The bank’s loan income dropped 5.4 percent last quarter from a year earlier to 254.5 billion yen. Fees and commissions fell 1.5 percent to 103.9 billion yen, while profit from sales of bonds and other securities more than doubled to 81.2 billion yen from 31 billion yen.

For the nine month period, net income fell 36 percent from a year earlier to 271 billion yen, led by declines in lending profit, Mizuho said in the statement. The bank kept its full- year profit forecast at 460 billion yen.

[kennynah]

Deustche Bank Singapore just did some downsizing in the last 2 weeks...