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ASX News Live | ASX Up 0.5%; Westpac, Novatti, Splitit, Raiz, Medibank Feature

Westpac CEO Peter King: impact of higher interest rates on households inevitable

Addressing investors following the release of Westpac’s FY22 results, chief executive Peter King admitted that while Australians remain resilient, the impact of higher interest rates will indisputably be felt, especially when borrowers’ low fixed-rate loans roll over.

King commented:

“We are not yet seeing increases in hardship or stressed assets. Many customers built up savings during the past two years and 68% remain ahead on their mortgage repayments. However, it is inevitable that the impact of higher rates will be felt, including when borrowers’ low fixed-rate loans are rolled over.

“As we approach the new year, there’s increased economic uncertainty and volatility in financial markets. Although supply chain constraints are easing, skilled labour remains hard to find. The biggest challenge for the authorities is to contain the high inflation psychology that is now taking hold in the economy.

“In Australia, consumer spending is resilient but as higher rates bite, we expect the heat to come out of the economy and inflation pressures to ease. Small business is one sector we are watching closely as consumption slows.

“Housing prices have fallen in recent months and this will continue into 2023. Credit growth is expected to ease. GDP growth will slow and unemployment will rise. These will be necessary outcomes if we are to lower inflation.”

 

Raiz Invest falls on October trading update, cites ‘disappointing performance’ in Asia

ASX fintech Raiz Invest (ASX:RZI) slipped on Monday following the release of its October trading metrics.

Raiz cited the ‘disappointing performance’ of its Asian segment, noting it will review its ‘customer segmentation strategies.’

RZI shares are down 70% year to date.

On Monday, Raiz Invest released its operating metrics for the month of October.

The highlights:

  • General Group Customer Signups at 3,138,781, up 1.9% month on month, and 39.9% year on year
  • Group Investment Accounts at 1,586,906, up 1.8% MoM, and 45.1% YoY
  • General Active Customers at 670,583, down 10 basis points MoM and up 20.7% YoY
  • Global FUM at $1.02 billion , up 4.6% MoM but 2.1% YoY

By segment, Raiz reported little movement in Australia active customers or retail FUM.

Australian active customers fell slightly YoY to 289,255 while retail FUM rose slightly to $810.4 million.

Australia did see a 7% rise in superannuation FUM to $197 million.

While Raiz provided individual breakdowns for both Indonesia and Malaysia, the two segments have a combined total FUM of $13.8 million.

Active Indonesia customers rose 51% YoY to 271,595 while active Malaysia customers rose 29% YoY to 109,733.

The group’s, CEO Brendan Malone, commented on Raiz’s October performance:

“We continue to focus on our customers and understand what drives their savings goals and behaviour within the Raiz app. We are reviewing our customer segmentation strategies and evaluating the app and product enhancements that will help drive our customer centric model to the next level.

It is pleasing to once again have surpassed $1 billion in FUM given the economic uncertainty, and market volatility over the last twelve months; returning to this milestone highlights the resilience and stickiness of the Raiz customer base. As we continue to focus on our core offerings it was great to note that our Australian Superannuation offering saw the strongest performance in October with FUM increasing by 5.3%.

The performance of our Asian operations was disappointing, we continue a review of both the structure of these businesses and each operating model to better position them for success”.

Medibank: “all of the customer data accessed could have been taken by the criminal”

Medibank admitted that all customer data accessed in the cyber attack “could have been taken by the criminal”.

The extent of the breach is enormous. MPL now believes the criminal accessed the name, date of birth, address, phone number and email address for around 9.7 million current and former customers.

The criminal also accessed the Medicare numbers of ahm customers but not the expiry dates.

Further, Medibank thinks the criminal accessed passport numbers and visa details for international student customers but not the expiry dates.

However, the insurer does not believe the criminal accessed credit card and banking details of anyone affected by the breach.

Medibank won’t pay ransom: ‘limited chance’ random would ensure return of customers’ data

Medibank won’t pay any ransom demand to recover customers’ data.

MPL chief executive David Koczkar explained the decision by citing the low likelihood of a ransom guaranteeing the return of customers’ data:

“Based on the extensive advice we have received from cybercrime experts we believe there is only a limited chance paying a ransom would ensure the return of our customers’ data and prevent it from being published. In fact, paying could have the opposite effect and encourage the criminal to directly extort our customers, and there is a strong chance that paying puts more people in harm’s way by making Australia a bigger target.”

 

Should you invest in lithium stocks right now?

Should you invest in lithium stocks right now?

Lithium has defied the odds; its acceleration is primarily down to future optimism in the uptake of electric vehicles (EVs). But in many ways, this commodity is a ‘one-hit wonder’ as it’s used principally in the manufacture of EV batteries.

Lithium has garnered a wide audience over recent months. Anything from fund managers to governments to celebrity CEOs, everyone seems to have a positive take on this ‘trendy’ metal.

Recently, Tesla’s Elon Musk piped in with comments suggesting lithium producers can structure their business as ‘a license to print money’.

But in my mind, the lithium story pales in comparison to the looming supply issues of other, more important, critical metals.

https://www.dailyreckoning.com.au/a-mini-boom-in-this-global-sell-off/2022/11/07/

Australian lithium exports to China rise sixfold since 2016

Australian lithium producers have raised their lithium carbonate exports to China sixfold since 2016 as demand for the white metal critical to EV production ramps up.

Ryan Dinse — calling BS on inflation

Elon Musk tweeted in January last year that:

‘The most entertaining outcome is the most likely.’

That certainly seems to be true when it comes to his own life! It’s also probably more of a self-fulfilling prophecy than anything else.

But it made me think…

Is this true of market outcomes too?

Well, sort of yes and sort of no.

In my experience, the most likely outcomes are the ones least expected.

I mean, who saw interest rates rising at a record pace 12 months ago? Certainly not bond investors, nor even central bankers themselves.

And it’s a point our Editorial Director, Greg Canavan, drummed home last week. He sent out a company-wide email that read:

‘Thanks to the Fin Review, you now know what’s in the news and in the price.

‘This is just a reminder for us to push ourselves beyond this narrative and look for the next thing that the mainstream media hasn’t seen yet.’

With that in mind, today, let’s explore a possible outcome not many are predicting or even thinking about…

Calling BS on inflation

We’re firmly in doom and gloom mode right now.

Everyone is expecting the worst…

The latest doom merchant was the Bank of England. Last week, they raised rates for the eighth time in a row from 2.25% to 3%.

At the same time, they added the warning that they could go as far as 5%, triggering a painful two-year recession.

The aim is to try to bring down inflation.

But what if interest rates have little effect on inflation?

Not a popular viewpoint right now, but I think it’s one worth exploring.

Jeff Snider, a strategist at Atlas Financial, is one lone voice advocating this line of thinking.

He says (my emphasis):

‘This idea that rate hikes somehow restrain the economy via credit just doesn’t stand up to scrutiny.

‘Everyone agrees with the idea simply because everyone agrees with the idea. Credit growth was sustained when rates were higher and rising.’

Fat Tail Investment Research

Source: Twitter

Jeff does a great job of explaining his opinion in this 20-minute video.

His main point is that the relationship between interest rates and inflation is mostly an illusion perpetuated by the Fed since the 1980s in order to pump up their own importance.

https://www.moneymorning.com.au/20221107/the-most-likely-outcome-for-2023.html

BNPL firm Splitit signs deal with Checkout.com but unsure of business impact

BNPL fintech Splitit (ASX:SPT) signed a deal with Checkout.com to “provide a scaled distribution partner with global reach to expand the merchant and marketplace adoption of Splitit’s instalment-as-a-service platform.”

However, SPT said it was unsure of the “economic materiality” of the deal “due to the variable nature of revenues which are dependent on merchant adoption of Splitit’s platform and the value of customer purchases using Splitit’s services.”

SPT shares are currently up 4%.

Twitter as the most accurate source of information about the world?

Elon Musk wants Twitter to become the “most accurate source of information about the world”.

Can Twitter achieve that status? And should the social media platform even set itself that goal?

Novatti up 50%, set to launch International Bank of Australia after APRA grants restricted banking licence

Payments fintech Novatti (ASX:NOV) has been granted a restricted authorised deposit-taking institution (RADI) licence by the Australian Prudential Regulation Authority.

The licence kickstarts NOV’s launch of its banking business, to be called the International Bank of Australia.

The banking business will launch as the International Bank of Australia.

NOV shares are surging, currently up 54%.

Managing director Peter Cook, said:

“We see banking services as significant across card issuing, merchant acquiring, billing and cross-border payments as it underpins the infrastructure and capability to Novatti’s core payments business while also giving us the ability to increase margins. The delivery of this licence, and now the launch of International Bank of Australia, has therefore formed a core part of Novatti’s growth strategy for so long. In addition, the bank has the strong advantage of being able to leverage Novatti’s existing payments ecosystem and global footprint to help win customers quickly.”

CEO of International Bank of Australia Guy Carvalho said the new bank sees an opportunity to cater to the “underserved migrant sector”.

“In addition, we see huge potential in the significantly underserved migrant sector. The bank will have the advantage of being able to leverage Novatti’s existing payments ecosystem and global operating base to reach potential customers overseas and enable them to set-up bank accounts and transact before they even set foot in Australia. This is an incredibly unique service which will provide significant value to potential customers who want to get their lives sorted before reaching Australia.”

Novatti noted that its restricted licence runs for two years with the expectation that the business then either progresses to a full licence or exits the banking business entirely.

Kiryll Prakapenka

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