Lending rises 3.5% in September, Commonwealth Bank posts big first-quarter profit: Economy Roundup

The value of total personal finance commitments rose by a seasonally adjusted 3.5% in September to $7.6 billion, according to the latest figures from the Australian Bureau of Statistics.

Housing finance commitments rose by 0.6% to $13.7 billion, while personal fixed lending commitments rose by 6.3% and revolving credit commitments rose by 0.9%.

In commercial finance, the value of total commitments rose by 2.7%, while revolving credit commitments jumped 8.5% and fixed lending commitments rose by 0.5%.

The value of total lease finance commitments rose by a seasonally adjusted 0.2%.

AXA Asia Pacific Holding is considering a $14 billion offer from majority shareholder AXA SA and rival group AMP, the company has said in a statement.

The offer is valued at $6.43 per share or more, and matches a previous bid from NAB and AXA SA which was abandoned earlier this year.

“The cash amount would vary so that AXA APH minority shareholders receive $6.43 in value if the AMP VWAP was equal to, or greater than, $4.50 but less than $5.60,” AXA said in a statement to the Australian Securities Exchange (ASX).

“If the AMP VWAP was $5.60 or higher, AXA APH shareholders would receive 50 per cent of the benefit of that higher AMP share price.

Meanwhile, the Commonwealth Bank of Australia has recorded a 14% increase in unaudited cash earnings to $1.6 billion in the first quarter, chief executive Ralph Norris announced this morning.

However, Norris said the company still faces harsh operating conditions.

“Credit growth remains muted, and margins continue to come under pressure from higher average funding costs and price competition,” he said.

“Whilst we have passed the peak in the bad debt cycle, improvement in key credit quality indicators continues to be gradual, rather than dramatic.”
Norris said global economic recovery remains fragile and persistent signs of weakness still remain. The bank also said bad debt charges came to $321 million as confidence increases.

“Given this uncertainty, the group is retaining its conservative business settings, with capital, provisioning, funding and liquidity levels all remaining strong,” he said.

Pallet supplier Brambles will acquire German plastic container maker IFCO systems for $1.27 billion in order to expand its business into Europe.

“The purchase of IFCO represents a unique opportunity for Brambles to enhance its position as a leading pooling solutions provider and acquire operations with a strong growth profile,” Brambles chief executive Tom Gorman said in a statement.

“IFCO is a natural fit with Brambles existing RPC and pallet businesses and will allow us to continue to deliver on our strategy of diversifying our revenue base by product platform, geography and customer type.”

Shares lower after weak Wall Street lead

The Australian sharemarket has opened flat today, following a weak lead from Wall Street where financial stocks have dragged the market down. Sentiment has also remained low due to concerns the Chinese government may slow domestic economic growth.

The benchmark S&P/ASX200 index was up 16 points or 0.36% to 4709.5 at 12.15 AEST, while the Australian dollar remained at US98c this morning.

Commonwealth Bank shares dropped 1.1% to $49.09, while NAB shares gained 0.9% to $24.75. ANZ lost 0.3% to $23.16 as Westpac rose 0.3% to $22.01.

OneSteel has said its purchase of Moly-Cop and AltaSteel will position the company as a global player in the industry.

The company said it had bought the two firms for $US932 million, with chief executive Geoff Plummer saying they sit alongside its current operation extremely well and expand the business considerably.

“Post this transaction, OneSteel would have four or five of the largest grinding media facilities in the world,” Plummer said.

“It provides OneSteel with an opportunity to leverage its capability it has in terms of market knowledge, and the technical knowledge associated with grinding media which is a significant value-added input product into the mining industry.”

James Hardie has recorded a $US423.7 million net operating less, excluding asbestos expenses, for the September quarter. However, the company has said it still expects a net profit of between $US110 million and $US125 million for the year to March 2011.

BHP withdraws Potash offer

BHP has said it has withdrawn its offer for Potash and says it will embark on a $US4.2 billion share buyback.

“Unfortunately, despite having received all required anti-trust clearances for the offer, we have not been able to obtain clearance under the Investment Canada Act and have accordingly decided to withdraw the offer,” BHP chief executive Marius Kloppers said in a statement.

“The company believes that the Minister of Industry would have required additional undertakings beyond those BHP Billiton had already offered, which would have conflicted with BHP Billiton’s business strategy and been counter to creating shareholder value,” the company said.

Elders has recorded an annual net loss of $217.6 million in 2010, with the company saying it now expects underlying net profit of between $15-30 million for the 2011 financial year.

“On a like-for-like basis Elders has turned around its operating performance compared with the previous year and the results we are now seeing show that we are on track for the lift in performance we have targeted for 2011,” managing director Malcolm Jackman said in a statement.

“The past three months have been a period of intense effort within Elders as we set about reducing our cost to serve to a level that can generate acceptable returns in the current low price-low margin market and to lay foundations for a sustainable and value-accretive lift in sales revenue.”