Australian Home Approvals Rose 15.3%

Mayank Mehta, Chandrasekhar Atreya and Darlington Musarurwa
05 May, 2010
New York City

Stocks in Australia decline following world markets sell-off. Australian home building approvals increased 15.3% in March. Westpac Banking Corp. profit in the first half soars 32% to A$2.88 billion.

[R]3:00 AM New York, 7:00 PM Sydney – Stocks in Australia decline following world markets sell-off. Australian home building approvals increased 15.3% in March. Westpac Banking Corp. profit in the first half soars 32% to A$2.88 billion.[/R]

Australia’s stock index tumbled despite a recovery in commodity stocks in the afternoon session.

Home-building approvals rose in March at the fastest pace since 2002 despite the recent interest rate hikes. The number of permits to either renovate or build new homes rose 15.3% over February, said the Australian Bureau of Statistics in Sydney today.

Westpac Banking Corp. reported record profit for the six months ended in March as provisions for impairments dropped.

The cost of protecting corporate bonds from default in Australia surged after the euro dropped along with US and European stocks on concern Greece’s debt crisis may spread.

Many of the 40 mining companies told the Prime Minister in a breakfast meeting with Kevin Rudd and Resources & Energy Minister Martin Ferguson, the proposed mining profit tax is going to impact their ability to pay dividends as well as raise capital, said Simon Bennison, CEO of the Association of Mining & Exploration Companies in Perth in an interview with Bloomberg.

Pharmaceutical companies have agreed to cut the government’s medicine bill by A$2 billion over the next four years in return for certainty about future price changes, the Australian Financial Review reported.

Pharmaceutical profits are likely to drop as a result, said the newspaper quoting the Pharmacy Guild of Australia.

In Sydney trading ASX 200 Index dropped 1.3% or 63.1 to 4,674.00.

Of the ASX 200 index stocks, 34 rose, 154 fell, and 12 were unchanged. Mount Gibson Iron led gainers in the index shares with a rise of 7.6% followed by Fortescue Metals advancing 6.2%.

The Australian dollar decreased 0.1% to 90.80 U.S. cents.

Building Approvals Rise 15% in March

The Australian Bureau of Statistics reported today that total dwelling units approved rose 15.3% to 16,383 units in March from the previous month and gained 51.6% from the same period a year ago.

Private sector houses climbed 0.5% from a month earlier and 29.7% from a year ago to 9,779 units, while other private sector dwellings jumped 59.9% for the month and 56% for the year to 4,558 units.

The number of dwellings approved showed the greatest increases in New South Wales 3.5%, Western Australia 3.1% and South Australia 2.9%.

According to the report, New South Wales was the only state to record a fall this month with private sector house approvals falling 1.4%.

In addition, the value of total building approvals rose 1.3% in March and the value of total residential and non-residential building approvals rose 1.3% and 1.4% respectively.

Westpac H1 Profit Soars 32%

Westpac Banking Corp said today its statutory net profit after tax in the six months ended March rose 32% to A$2.88 billion.

Cash earnings also gained 30% to A$2.98 billion in the period.

The lender declared an interim dividend of 65 cents, representing a payout ratio of 65%.

Chief Executive Officer Gail Kelly said it grew its Australian home lending balances by A$43 billion.

Westpac provided 355,000 new mortgages and customer deposits rose by $15 billion, while its Australian market share increased from 23% to 24%.

The Group’s provisions rose to A$5.3 billion in the first half, with economic overlay unchanged at A$502 million.

Also collective provisions to credit risk weighted assets increased by 25 basis points to 150 basis points.

90 day mortgage delinquencies dropped 11 basis points in the period.

However, the bank remains cautious on future prospects in the wake of fears over fiscal deterioration in Europe.

“In Australia we will continue to see impacts particularly over the next two years, as the transition towards new regulatory arrangements begins and the economy adjusts to post crisis credit costs. As a result we believe it is important to retain prudent balance sheet settings to deal with the challenges ahead,” said Kelly.

Shell, PetroChina’s Arrow Bid Unchanged

Royal Dutch Shell spokesperson said its joint A$3.4 billion bid with PetroChina for Arrow Energy remains unchanged after recent pronouncements by the government that it intends to impose a 40% tax on super profits on miners.

The offer has since been approved Foreign Investment Review Board.

ASX Movers

Caltex Australia Limited led decliners in the S&P ASX 200 index with a loss of 7.8% followed by Monadelphous Group Limited 7.6%, St Barbara Limited 5.8%, Elders Limited 5.8% and Aquarius Platinum Limited 5.5%.

Mount Gibson Iron Limited led gainers in the S&P ASX 200 index with a rise of 8.5% followed by Fortescue Metals Group Ltd 8.1%, Murchison Metals Limited 6.3% and Atlas Iron Limited 4.4%.

Other Movers

BHP Billiton plc added 0.4% to A$38.77.

Cape Lambert Iron Ore Limited closed unchanged at A$0.42.

News Corporation dropped 4.3% to A$18.93 after the diversified media company reported quarterly earnings of 32 cents a share beating the expectations between 21 cents and 23 cents a share.

Westpac Banking Corporation decreased 4.0% to A$26.23.

Woodside Petroleum Ltd dropped 1.0% to A$44.74 after the oil and gas producer said shares of oil companies rose after overnight gains in crude prices.