Australian Bank Hike Fees; ASX Up 1.4%

123jump.com Staff
24 Dec, 2008
New York City

Australian banks increase fees and charges collected from loan issuances for mortgages, personal loans and credit cards. The banks have increased charges as rates have been lowered. Instead of cutting management salaries and operating costs banks have looked at customers to collect more revenues.

[R]3:00AM New York, 7:00PM Sydney- Australian banks collect more fees and charges from customers as interest rates decline. AGL announced A$171 million takeover bid for Sydney Gas.[/R]

Australian stocks rose 1.4% on a rebound in resource stocks and ahead of holiday season.

In Sydney trading ASX 200 index rose 1.4% or 50.8 to 3,582.20.

Of the ASX 200 index stocks, 134 rose, 41 declined, and 25 were unchanged. NRW Holdings Ltd. led gainers in the index shares with an increase of 20.7%.

Australian Banks Increase Fees

The Australian Prudential Regulatory Authority noted in a research published yesterday that banks accrued income from fees and commissions of A$22.6 billion in the year to June compared to A$20.5 billion earned in a period year earlier.

Banks hiked fees and charges on mortgages, credit cards and personal loans despite the recent rate cuts by the Reserve Bank of Australia. Australian banks have increased fees for mortgage issuance, credit card debts and late fees and personal loans underwriting. Banks are showing increasing willingness to disregard RBA directive to issue more loans.

Account fees paid by Australian customers increased to an estimated A$1.4 billion in the three months to June on transaction and lending activity.

According to the report, Australians had A$1.41 trillion in their bank accounts in the quarter to June from A$1.15 trillion in the same period a year ago.

Amounts in normal transaction accounts that offer zero interest rates were A$596.6 billion, while term deposits jumped from A$323.5 billion to A$412.5 billion.

AGL Takeover Bid for Sydney Gas

AGL Energy Ltd. reported today that it has agreed to acquire all the issued shares of Sydney Gas Ltd at A$0.425 cash per share or A$171 million.

AGL has also entered into pre-bid agreements with SGL''s two largest shareholders controlling 20% of outstanding shares.

The offer is at a 55% premium to SGL''s yesterday closing price of $0.275 before the trading halt and represents a 117% premium to the average price of the shares over the last 30 days of trading.

SGL''s acquisition is funded from cash reserves and will not materially alter the recent net profit guidance of A$370 million to A$400 million.

AGL managing director Michael Fraser said, “Combining this acquisition with our recent purchase of the Gloucester Basin acreage will give us the opportunity to further increase our ownership of gas reserves in our core New South Wales market.”

Gainers & Losers

NRW Holdings Ltd. led advancers in the ASX 200 index shares with a rise of 20.7% followed by increases in Babcock & Brown of 18.7%, in Tishman Speyer of 16%, in HFA Holdings of 14%, and Macquarie Office of 13.8%.

Babcock & Brown rose on news that banks earned A$2 billion on fee hikes that were independent from the Reserve Bank of Australia.

Lynas Corp. led decliners in the ASX 200 index shares with a drop of 34% followed by losses in Mount Gibson Iron of 8.2%, in ING Industrial of 6.1%, in Energy World Corp. of 5%, and Babcock & Brown of 4.9%.

CBA Buys Loan Book From General Electric

Commonwealth Bank of Australia reported today that it will purchase A$4 billion of loans from General Electric Co. to extend its footprint in the mortgage market.

Aussie Home Loans, in which the lender has 33% equity will purchase the distribution network of GE division Wizard Mortgage Corp.