Westpac Banking Group says the global economic outlook remains mixed, and has flagged a tougher line on borrowing rates as the cost of funding rises.
“Growth here has slowed, and consumers and businesses are naturally cautious,” chief executive Gail Kelly has told shareholders this morning.
But Kelly expressed confidence in Australia’s outlook despite slowing growth in China, slow improvements in the US and reverberating problems in Europe.
“As a country, we have not engaged in the excesses of many other developed nations and successive governments have exhibited excellent fiscal disciplines over many years. We are further supported with significant monetary policy flexibility.”
She added that higher funding costs are now a reality, and pressuring banks’ interest margins.
“We are very mindful of the impacts of interest rate decisions on customers but these must be balanced with what is economically responsible.”
Telstra has a new chief financial officer and group managing director – former AXA Asia Pacific chief Andrew Penn.
Penn will replace long-serving CFO John Stanhope, who is set to retire, at the telco giant.
Fund manager AXA Asia Pacific was the subject of a long-running takeover battle, with AMP nabbing the local operations and France’s AXA SA taking its Asian operations last year.
Treasury Secretary Martin Parkinson says the Government will need to make tough decisions in the medium-term as tax receipts dip.
Parkinson said in a speech last night that tax receipts are “expected to stay below 2007/08 levels as a share of (gross domestic product) for much of this decade”.
He added that Europe spent 2011 lurching between economic catastrophe and mere disaster and rejected calls to intervene in the Australian dollar.
“I mean, what drives up the dollar? What’s drive it up is the rising terms of trade. The world is trying to give us a massive amount of wealth. If I tried to lower the dollar, I would be really saying I am going to take part of that wealth, pour petrol on it, and I’m going to burn it.”
“If you want to live in that world, that’s fine, but I don’t think it’s feasible for the long-term living standards of the Australian people.”
Meanwhile, the Australian sharemarket was weaker in early trade, following a negative night on Wall Street after its central bank said it wouldn’t take immediate action to boost the US economy.
“Although markets reacted negatively to a lack of action by the Fed, there are a lot of positives to take away from this,” IG Markets analyst Stan Shamu said.
“The Fed said the economy in the US is maintaining growth in an environment where the global economy is struggling. Surely this is a better situation to be in than needing a QE3 just to keep things afloat.”
At 11.50am, the S&P/ASX 200 was down 0.41% to 4176.4 and the All Ordinaries index was down 0.38% to 4235.7.
The market closed weaker yesterday.
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