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Speaker 1: Today on Fear and Greed. Australia's big banks report more

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Speaker 1: than fifteen billion dollars in half year profits, but future

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Speaker 1: growth looks tougher. Local cattle prices hit a two year high,

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Speaker 1: and Microsoft joins others in big tech to slash staff.

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Speaker 1: Plus the latest wages data shouldn't prevent an interest rate

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Speaker 1: cut next week, and Sarraz becomes our top wine export.

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Speaker 1: Welcome to Fear and Greed, Daily business news for people

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Speaker 1: who make their own decisions. It is Thursday, the fifteenth

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Speaker 1: of May twenty twenty five. I'm Michael Thompson and good

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Speaker 1: morning Sean Aylmer. Good morning Michael, Sean. It is bright

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Speaker 1: and early and you are joining me this morning from

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Speaker 1: Burke in western New South Wales. How is it this morning?

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Speaker 1: Are you ready and raring to go on the ride

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Speaker 1: for Country Kids bike ride this morning?

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Speaker 2: I'm scared, to be perfectly honest, Burke. What an incredible

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Speaker 2: big sky out here, spectacular and wonderful play to be.

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Speaker 2: We had a great night last night the Kidman property

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Speaker 2: and we are ready to go. So it's one hundred

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Speaker 2: and twenty seven kilometers today, I think to Koba, I'm.

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Speaker 1: A little scared you can hear it in your voice,

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Speaker 1: just slightly apprehensive, because the thing is you are not

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Speaker 1: a cyclist and Adam laying our fear and greed, colleague.

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Speaker 1: Both of you are doing this right, and you were

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Speaker 1: doing it to raise money for country kids, just to

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Speaker 1: help give better opportunities for them in life, and it

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Speaker 1: is part of the Royal Far West Charity of fantastic organization.

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Speaker 1: But you are you are a novice cyclist, aren't you.

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Speaker 1: I'm a novice and I'll tell you what. Some of

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Speaker 1: the bikes here so there are four pelotons P One, P. Two,

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Speaker 1: they're the serious guys P three, P four and the

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Speaker 1: reserves for P. Four, which is me. It's how I said.

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Speaker 1: But wow, some of the guys here, whoa. I'll let

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Speaker 1: them go on their own. Well, you are doing it

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Speaker 1: for a good cause, and if anyone is able to

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Speaker 1: help out and donate to make the kilometers a little

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Speaker 1: bit easier, I'll put a link in today's show notes.

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Speaker 1: And thank you to everyone who has donated that the

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Speaker 1: list is quite extraordinary. Chelsea Wimer, Mike Wilson, Benjamin Reed,

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Speaker 1: Justin Smirk, Danny John Georgie and Chris Barnum. Thank you

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Speaker 1: to everyone and good luck today, Sean.

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Speaker 2: Thank you, Michael.

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Speaker 1: Now we better get on with the show. The main

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Speaker 1: story this morning, Australia's big four banks made a combined

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Speaker 1: fifteen point three billion dollars in their half year reporting season,

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Speaker 1: a solid if unspectacular result, particularly given the run in

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Speaker 1: their share prices.

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Speaker 2: So Westpac, National, Australia Bank and A and ZED reported

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Speaker 2: last week. Commonwealth Bank has a different balance state. It

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Speaker 2: reported its half year profit in February. Yesterday, Commonwealth did

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Speaker 2: actually report its third quarter profit, a six percent rise

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Speaker 2: in cash profit. Expenses were a bit higher as a

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Speaker 2: bank boost it's spending on staff and technology. Common Wealth

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Speaker 2: Bank made two point six billion dollars for the quarter.

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Speaker 2: The title profit for the half year for the big

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Speaker 2: four banks was flat and it was up zero point

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Speaker 2: one percent. Both you when you exclude the impact of acquisitions,

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Speaker 2: notably A and Z purchasing sun Corps banking business. Given

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Speaker 2: the share price runs, that's not what I would say

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Speaker 2: is a great result. Net interest margins, effectively, the bank's

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Speaker 2: profit margins were steady. That's good. Banks prefer to fund

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Speaker 2: their lanes via deposits because they're cheaper, and now the

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Speaker 2: level of deposits funding is at a ten year high,

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Speaker 2: so that's helping boost those profit margins. But if you

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Speaker 2: take that away, maybe they're not so good. While some

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Speaker 2: of the heat has come out of the mortgage market,

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Speaker 2: meaning customers may not be getting as much as previously.

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Speaker 2: In terms of competition, the bin business lending market is

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Speaker 2: definitely warming up right now. Big banks aren't necessarily keeping

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Speaker 2: up with smaller lenders in terms of business banking growth.

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Speaker 2: That's something they will be concerned about. On the cost side,

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Speaker 2: technology spend is rising across the sector. That's the key takeaway,

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Speaker 2: and we saw that with Commonwealth Bank yesterday.

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Speaker 1: It's interesting, isn't Because while the big four banks and ZED, Commonwealth,

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Speaker 1: NAB and Westpaca are compeating obviously fiercely with each other,

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Speaker 1: it does seem like customers are increasingly kind of looking elsewhere.

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Speaker 2: Yeah, it's really fascinating. The options for customers are now

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Speaker 2: greater than ever, and according to a report from PwC,

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Speaker 2: the propensity to change banks is markedly higher the younger demographics,

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Speaker 2: up about fifty percent. In fact, jen z and millennials

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Speaker 2: are much more likely to consider non banks for their

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Speaker 2: core banking services compared to older generations, your deposit accounts,

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Speaker 2: your home loans. They don't necessarily go to a big

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Speaker 2: four bank. That certainly ups the pressure on the Big

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Speaker 2: four even more.

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Speaker 1: All Right, I'm going to put you on the spot now, Sean,

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Speaker 1: which bank is doing best?

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Speaker 2: Oh my god, it's not for me to judge.

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Speaker 1: Is it. Well, that's why I asked you. Okay, If

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Speaker 1: not you then let's go to the market.

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Speaker 2: Then okay, So the market the response to ain Z's

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Speaker 2: result last week was lackluster, shall we say, And this

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Speaker 2: year the bank's share price is flat. So twenty twenty

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Speaker 2: five investors were much more welcoming of NABS half a

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Speaker 2: year result last week, but it's actually the underperformer this year.

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Speaker 2: It's share price is down four percent. West Pax half

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Speaker 2: year is probably the greatest disappointment. Its share price is

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Speaker 2: down two percent for the year. Common Bank story is

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Speaker 2: well known. Investors just love it and it's really expensive.

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Speaker 2: Its share price is up eight percent this year. So

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Speaker 2: up for Common, off Bank, flat or down for the rest?

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Speaker 1: All right, Now after the show, Sean, you have a

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Speaker 1: great conversation today because we are talking all about banks.

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Speaker 1: You're speaking with Noel Williams, who is PwC Australia's banking

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Speaker 1: and Capital markets leader.

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Speaker 2: So we talked to Noel about what this performance means,

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Speaker 2: what it means for the sector. We go through why

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Speaker 2: they've got to spend more on technology, for example, what's

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Speaker 2: going on around costs, what's happening around profit margins. It's

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Speaker 2: a really fascinating kind of look under the hood of

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Speaker 2: what's going on in the banking sector.

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Speaker 1: Yeah, it's really it's actually quite a fun chat, which.

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Speaker 2: That sounds surprised.

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Speaker 1: Well, no maybe just says that I've been hanging around

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Speaker 1: you for too long, but all of a sudden I'm like, oh,

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Speaker 1: this is this is actually really enjoyable. We're talking about

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Speaker 1: banks rather than just interesting. Anyway, it is coming up

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Speaker 1: after the show, so stick around for that one. Just

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Speaker 1: checking local markets quickly shown the S and PA Sex

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Speaker 1: two hundred closed up just zero point one percent hire

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Speaker 1: yesterday to two hundred and eighty points to record a

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Speaker 1: sixth consecutive day of gains. The big miners helped to

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Speaker 1: offset losses from a Quarry Bank and Aristocrat Leisure poke

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Speaker 1: machine maker. Aristocrat posted results that fell short of expectations.

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Speaker 1: Its shares were down almost nine percent Maine farmer. This

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Speaker 1: was an interesting one. Dropped almost sixteen percent, went to

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Speaker 1: a trading halt after a letter from the FDA in

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Speaker 1: the US about a contraceptive drug. And Insignia Financial, another

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Speaker 1: big mover, fell almost sixteen percent after BANE Capital withdrew

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Speaker 1: its five dollars per share offer that value that one

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Speaker 1: hundred and seventy nine year old firm at three point

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Speaker 1: four billion dollars. That leaves CC Capital now as the

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Speaker 1: only bidder for Insignia, which as previously, as you've pointed out,

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Speaker 1: it was previously if the Independent Order of odd Fellows.

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Speaker 1: And it's just a fun name to say, really, and

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Speaker 1: it's a pity we don't get to say it more.

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Speaker 1: And the US Federal Reserve is under pressure to cut

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Speaker 1: interest rates, including sean perhaps unsurprisingly, pressure from US President

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Speaker 1: Donald Trump.

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Speaker 2: Love with than expected inflation figures for April headlining core

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Speaker 2: prices are up just zero point two percent, has triggered

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Speaker 2: calls for rate cuts and helped Wall Street gain grounds.

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Speaker 2: If you think of that zero point two percent, that's

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Speaker 2: two point four percent annualized. That's pretty good. Following the report,

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Speaker 2: Donald Trump came out again he pressured Federal Reserve chair

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Speaker 2: Jerome Power to lower interest rates. I'll quote what he said,

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Speaker 2: and I won't mean plenty of caps in this as

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Speaker 2: you'd imagine, no inflation and prices of gasoline, energy, groceries

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Speaker 2: impractically everything else are down down was in caps. He

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Speaker 2: goes on, the Fed must lower the rate like Europe

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Speaker 2: and China have done. What is wrong with too late?

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Speaker 2: Pal end quote?

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Speaker 1: All right, Sean, We're going to take a quick break

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Speaker 1: before I do a quick reminder of the Fear and

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Speaker 1: Greed Daily newsletter. You might be kind of on the

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Speaker 1: bike for a few days, but the newsletter continues regardless.

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Speaker 1: If you haven't signed up already, head along to Fearangreed

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Speaker 1: dot com dot au. It comes out every morning by

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Speaker 1: six am. It'll be in your inbox and it's entirely free.

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Speaker 1: I'll put a link in today's show notes as well. Sean.

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Speaker 1: We'll be back in a moment with the rest of

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Speaker 1: the day's business news. Sean, I want to do something

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Speaker 1: a little bit different today. Can I tell you about

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Speaker 1: something that I have been looking into, which is wages data?

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Speaker 2: A economist Michael Thompson, please can't wait?

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Speaker 1: All right, budding economists, here we go annual wages growth

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Speaker 1: increase to three point four percent in the March quarter

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Speaker 1: from three point two percent into December, the quarterly rate

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Speaker 1: was zero point nine percent. The jump was in part

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Speaker 1: due to the first installment of pay rises for aged

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Speaker 1: care and childcare workers following a ruling by the Fairwork Commission,

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Speaker 1: which we talked about previously. Now economists say that it

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Speaker 1: won't be enough to stop the Reserve Bank cutting interest

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Speaker 1: rates by twenty five basis points when it meets next week.

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Speaker 1: According to the Financial Review, that's because there's little evidence

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Speaker 1: that wage rises are increasing outside jobs where the Fairwork

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Speaker 1: Commission and the government had intervened. But they're also warning

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Speaker 1: that that generous government funded wage rises in these low

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Speaker 1: paid jobs can't really be sustained without improvements in productivity.

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Speaker 1: So a very interesting one to watch there. Now, local

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Speaker 1: wine exports are rising, which is obviously one that you

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Speaker 1: have a vested interest in here Sean because you love

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Speaker 1: your wine. It's thanks largely to big demand from China,

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Speaker 1: but what we are selling overseas has actually changed quite

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Speaker 1: a bit.

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Speaker 2: In total, weeks brought about six hundred and forty seven

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Speaker 2: million leaders of wine each year. At least that was

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Speaker 2: for the twelve months the end of March. Overseas buyers

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Speaker 2: are now loving our reds less so our wives. The

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Speaker 2: top rital, according to Wine Australia, is Michael, You've got

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Speaker 2: a guess it's a reds. Yeah. Well, sales are up

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Speaker 2: twenty five percent in the last year, whereas a number

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Speaker 2: two expert chardonnay down five percent. I can't I can't

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Speaker 2: stand shardonay.

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Speaker 1: I just I was gonna ask you, Sean on your bike,

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Speaker 1: have you got any room in your saddle bags for I've.

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Speaker 2: Got to tell a little story the night So it

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Speaker 2: wasn't last night. It was the night before last. So

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Speaker 2: Adam and I we met in Dubbo and we thought

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Speaker 2: we needed a team briefing. So we went to this

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Speaker 2: spectacular Indian restaurant in Dubbo. Jackie, my partner, was with

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Speaker 2: me and her son Lochlan. The four of us. We

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Speaker 2: got excited. Not good training for a bike ride, drinking

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Speaker 2: red wine. Oh that's what I will say. Oh my god, No,

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Speaker 2: no wonder, That's why I'm so scared. I was going

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Speaker 2: to say, no wonder. You are so apprehensive.

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Speaker 1: Now you've got all these other writers who are in

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Speaker 1: peak physical condition. And then you've got I slightly hung

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Speaker 1: out shown Aylmer and Adam Lane kind of hiccupping and

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Speaker 1: kind of toddling along behind the peloton.

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Speaker 2: So charraz sha today. Number three's cap sav that was

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Speaker 2: up thirteen percent. Number four Pino gre or Griggio, it's

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Speaker 2: down ten percent. The interesting trend is we sell lots

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Speaker 2: of expensive wines I think pen files, and lots of

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Speaker 2: cheap wines under five dollars a bottle. Not much in between.

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Speaker 1: Another quick one worth a mention. Sean Macquarie Bank is

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Speaker 1: being sued by ASEK for misleading conduct and could be

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Speaker 1: fined more than seven hundred million dollars. The corporate regulator

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Speaker 1: is alleging that Macquarie misreported millions of short sales. That is,

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Speaker 1: when you sell something you don't own in the hope

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Speaker 1: of buying it back later at a cheaper price in

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Speaker 1: pocketing the difference. And we actually did an episode of

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Speaker 1: As Fear and Greed yesterday on short selling. It's a

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Speaker 1: really good explainer of how it all works. ACIX chair

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Speaker 1: Joe Longo says Mcquarie under reported the amount of short

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Speaker 1: sales by seventy three million between twenty nine and twenty

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Speaker 1: twenty four, meaning the financial markets have been given misleading

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Speaker 1: and false information for more than fourteen years. From Macquarie's side, though,

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Speaker 1: they say the problems are now fixed and there are

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Speaker 1: additional controls in place. Australian cattle prices SEAN have hit

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Speaker 1: their highest level in more than two years, helped by

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Speaker 1: favorable rainfall and heightened trade tensions between the US and China.

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Speaker 2: Amazing when you're in somewhere far flying, you start getting

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Speaker 2: interested in stuff that you don't really know a lot about.

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Speaker 2: That's the case. Did you know that the measure is

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Speaker 2: the Eastern State's Young Cattle Indicator? How's that?

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Speaker 1: I didn't know that I was going to bluff my

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Speaker 1: way through that. I'm like, no, just be honest, Michael.

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Speaker 2: Yes, Well, so it's climbed to seven dollars tour for kilo,

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Speaker 2: highest level since March twenty twenty three, according to Meat

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Speaker 2: and Livestock Australia. It was less than half that level

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Speaker 2: in late twenty twenty three, when dragt conditions and market

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Speaker 2: uncertainty dampened sentiment. Recent rainfalls in parts of Queensland and

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Speaker 2: the New South Wales have improved pastures that meant producers

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Speaker 2: have restocked herds. Good thing. Also buyers from processes to

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Speaker 2: feed loss to graziers of return to sale yards. That's

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Speaker 2: helped push prices up as well. Escalating trade tensions between

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Speaker 2: the US and China, which are actually the two world's

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Speaker 2: two biggest consumers of beef, are also helping prices baiting

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Speaker 2: raised duties on American beef. Now they'll probably come down

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Speaker 2: after the most recent deal between the two, but that

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Speaker 2: has actually helped OSSI beef prices. So the farmers are

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Speaker 2: having a pretty good time of it at the moment.

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Speaker 1: Turning to international news, now shown Donald Trump has hailed

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Speaker 1: the US's relationship with Saudi Arabia. Just hours after the

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Speaker 1: White House unveiled what it said was six hundred billion

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Speaker 1: dollars worth of defense, artificial intelligence and other deals with

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Speaker 1: the kingdom, the.

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Speaker 2: US President lorded the kingdom and it's de facto leader,

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Speaker 2: Crown Prince Muhammad bin Salman, as he began the first

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Speaker 2: leg of his three nation tour of the All Rich Golf.

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Speaker 2: According to the Financial Times, Trump told an auditorium in

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Speaker 2: read quote, He's an incredible man. I've known him a

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Speaker 2: long time. Now, there's nobody like him. Quote among the

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Speaker 2: guests Elon Musk and Vidia's boss Jensen Huang, and dozens

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Speaker 2: of other US executives. Prince Muhammad said the two countries

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Speaker 2: would work over the coming months to increase that total

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Speaker 2: spend from six hundred billion to one trillion US dollars.

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Speaker 1: Finally shown, Microsoft will cut three percent of its global

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Speaker 1: workforce as it seeks to cut costs and pairback layers

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Speaker 1: of middle management.

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Speaker 2: It's the latest round of job cuts at big tech companies,

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Speaker 2: with both Amazon and Meta in the process of cutting

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Speaker 2: thousands of roles. Microsoft will slash six thousand jobs, including

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Speaker 2: some at international officers. Not sure how that will affect Australia,

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Speaker 2: and also wholly owned subsidiaries such as LinkedIn. It follows

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Speaker 2: performance related job cuts this year that affected about two

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Speaker 2: thousand Microsoft employees. Tech companies are basically balancing their workforce

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Speaker 2: needs and the cost of that workforce against really big

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Speaker 2: investments in an artificial intelligence and greater competition from startups

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Speaker 2: like AI. Meta branded about five percent of the company's

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Speaker 2: low performers, then fired them earlier this year. Over the

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Speaker 2: past few years, Meta has reduced its workforce by around

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Speaker 2: twenty five percent.

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Speaker 1: All right, Seawan up next is the Fear and Greed

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Speaker 1: Daily Interview. Your guest today Noel Williams, PwC, Australia's Banking

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Speaker 1: and Capital Markets leader, a great chat about banks. It

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Speaker 1: is coming up in the Fear and Greed playlist on

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Speaker 1: your podcast platform or at Fearangreed dot com dot au,

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Speaker 1: which is also where you sign up for the daily

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Speaker 1: newsletter Sewn You but to get on your bike.

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Speaker 2: I will get on my bike nicely put good luck.

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Speaker 1: It is Thursday, the fifteenth of May twenty twenty five.

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Speaker 1: Make sure you're following the podcast and please join us

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Speaker 1: online on LinkedIn, Instagram, x TikTok and Facebook. I'm Michael Thompson.

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Speaker 1: That was Fear and Greed. Had a great day.