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Australia shares slide as banks plummet; NZ falls
May 9, 2017 / 3:27 AM / 3 months ago

Australia shares slide as banks plummet; NZ falls

3 Min Read

May 9 (Reuters) - Australian shares fell on Tuesday, hurt by strong declines in the "Big Four" banks which said they were working hard to cut costs to maintain earnings momentum as they face challenges such as new government inquiry and a possible new levy.

The S&P/ASX 200 index slipped 19.093 points, or 0.3 percent, to 5,851.8 points by 0257 GMT.

In the first half of the financial year, the cash earnings of Commonwealth Bank of Australia (CBA), Westpac Banking Corp, National Australia Bank (NAB) and Australia and New Zealand Banking Group (ANZ) rose by an average of 6.2 percent on flat revenue, according to a KPMG report.

As revenue stagnates and the mortgage business struggles with regulations designed to cool a red-hot housing market, the banks' profit growth increasingly depends on cost-cutting and boosting margins.

There also has been political pressure for a far-reaching inquiry into financial sector malpractice, with the government saying it will look into competition in the financial system, following a series of scandals in the banking sector.

Sentiment was also affected by media speculation that the government intends to impose a transactions tax on institutional lending.(bit.ly/2ppfC0C)

"By default, that (levy on lending) is going to drive up interest rates because it is a cost of doing business. It is a ghost tax. You are taxing the consumer without doing it directly. You are going to tax the banks, which will then drive up their cost of doing business," said Mathan Somasundaram, Market Portfolio Strategist at Blue Ocean Equities.

The financial index slumped more than 2 percent to a six-week low, with the "Big Four" banks falling by as much as 2.3 percent to 3.1 percent.

In other stocks, Ardent Leisure Group slid as much as 8.8 percent to post its biggest intra-day percentage fall in 10 weeks after it said it expects its theme park division to report a loss for the year ended June 30.

The declines were not broad-based, however, with eight out 10 sectors in the black.

Explosives and fertiliser maker Incitec Pivot Ltd gained 3.7 percent after it reported an 11 percent rise in half-year underlying profit on Tuesday as cost cuts offset weak commodity prices.

Crown Resorts was 1 percent firmer after the casino group agreed to sell its remaining stake in Macau-focused Melco Resorts and Entertainment Ltd for $1.16 billion as it looks to pay down debt and focus on its Australian businesses.

New Zealand's benchmark S&P/NZX 50 index slipped 0.4 percent or 28.57 points to 7,397.89.

Healthcare, materials and industrials were the biggest drag on the index.

Seafood company Sanford Ltd was among the biggest percentage losers, falling 2.8 percent.

For more individual stocks activity click on

Reporting By Shashwat Pradhan in Bengaluru; Additional reporting by Rushil Dutta; Editing by Eric Meijer

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