THE NEWS WRAP: Europe climbs out of recession
Wednesday, August 14, 2013/
The European Union has ended its recession with a second quarter growth rate of 0.3% led by a robust 0.7% gain in Germany and 0.5% in France, beating analysts’ expectations of 0.2% growth for the 17-nation bloc.
However, EU Economic Affairs Commissioner Olli Rehn warns tough economic reforms need to continue in order to make the growth sustainable.
“A sustained recovery is now within reach but only if we persevere on all fronts of our crisis response… There is still a very long way to go before we reach our ultimate goal of a sustainable growth model that delivers more jobs,” Rehn says.
Commonwealth Bank cautious after record profit
Commonwealth Bank chief executive Ian Narev reported a record $7.8 billion full-year cash profit yesterday, but warned there are limited short-term risks in the economy.
The bank also declared a fully-franked dividend of $2, taking its total annual dividend up to $3.64, with Narev claiming uncertainty over Basel III banking rules and the potential surge in loans mean it cannot afford a larger payout.
“You can always try to get a bit of a short-term kick on the stock price by surprising people with the dividend,” Narev says.
“That will get unwound as soon as you go ex-dividend, then you’re left with weaker capital. We’d rather manage for the long term.”
Optus announces bill shock plan after June quarter revenue decline
Optus has announced a plan to reduce “bill shock” in a bid to lure customers following a decline in revenues during the June quarter.
While Optus reported a 7.7% increase in profits $167 million, overall revenues were down 5.3% to $2.12 billion and mobile revenue fell 6.1% to $1.34 billion.
Under its new plans, the telco will temporarily move customers to a higher plan rather than charge high excess usage charges if customers exceed their monthly quotas.
“Bill shock is going to become a bigger issue in the next few months. I say that because 4G is taking off and more customers are going through their (data) limits,” Optus chief executive Kevin Russell says.
The Dow Jones Industrial Average is down .73% to 15337.66. The Aussie dollar is up to US91.28 cents.