AUSTRALIAN BIGGEST BANKS ABOUT TO AXE 7,000 JOBS

The big banks are likely to scrap 7000 jobs over the next two years as lenders cut costs that account for 58 per cent of expenses to offset the weakest credit growth since World War II, according to UBS.

Lenders will reduce total staff numbers by 3.9 per cent to 172,000 from 179,000, UBS analysts said in a note to clients. Those figures don’t include ANZ’s Asian staff, they said.

The focus on employment costs at banks mirror the challenge faced around the world by lenders battling slower revenue growth amid weak household and business confidence. ANZ is preparing to cut as many as 900 jobs in coming months, the union that represents bank workers said last week.

‘‘We expect the banks to be heavily focused on their cost bases,’’ the UBS analysts said. ‘‘Solid reductions in headcount and discretionary costs are anticipated as banks react to the lower growth environment.’’

UBS continues ‘‘to be cautious on the outlook for credit growth’’ and doesn’t expect a ‘‘significant pickup in the housing market’’, the note said.

To help spur borrowing, the central bank lowered the benchmark rate by a quarter percentage point on November 1 and December 6 as Europe’s debt crisis dimmed prospects for global growth.

UBS estimates housing credit grew from 1977 to 2010 at a 14 per cent annual pace, and is currently expanding at 5.7 per cent, the weakest rate since World War II.

‘‘We anticipate housing credit growth to continue to remain subdued, probably staying in the 4 to 6 percent range for some time,’’ the analysts said.

Lowest profit per employee

Australia’s banks in recent years became ‘‘more lax’’ in managing staff numbers as they invested to meet expanding demand for lending, after reducing headcount to 141,000 in 2002 from 166,000 in 1996, according to UBS.

Among the big four lenders, ANZ employees individually delivered the least profit, according to data compiled by Bloomberg and company reports. ANZ Bank made $109,424 in net income from each employee in the year ended September 2011. That compared with $138,819 at Commonwealth Bank, $185,379 at Westpac, and $116,900 at National Australia, the data show.

Still, Australia’s banks were among the best-performing lenders in the world last year. While shares of banks in the US fell 13 per cent, Japan’s lenders lost 23 per cent and Europe’s slumped 34 per cent, Australian banks fell 7 per cent, according to UBS. Only Canadian lenders fared better, limiting their 2011 decline to 3 per cent.

Reducing headcount to 172,000 ‘‘should help absorb underlying wage increases keeping total staff expenditure growth to around 1 per cent per annum,’’ the UBS analysts wrote.

Commonwealth Bank said in a statement that it has ‘‘no target or short-term plan for major staff reductions’’. The bank may make redundancies ‘‘from time to time in some areas, while in other areas more staff may be needed’’, it said.

Westpac ‘‘expects there will be a decrease in staff numbers this year, but we have no specific targets,’’ the bank’s spokeswoman Supreet Gosal said.

National Australia Bank expects staff numbers to ‘‘fluctuate in various parts of the business’’ as it completes and outsources some projects and continues to ‘‘focus on efficiency,’’ spokesman Brian Walsh said in a statement.

Kevin Foley, an ANZ Bank spokesman in Sydney, said that ‘‘there is some belt tightening going on in response to difficult market conditions’’.

Bloomberg

Yahoo warns of weak 1st quarter

more cost cuts planned

(Reuters) – Yahoo Inc warned revenue will again slide this quarter as traffic to the Internet portal drifts elsewhere and the company begins sharing search revenue with Microsoft Corp followed that with a declaration it is preparing its biggest year of hiring ever in 2011.

Yahoo has struggled to contain costs and jumpstart revenue growth while bleeding traffic to competitors such as Google and Facebook. It now ties up with Microsoft on search, hoping to keep a lid on expenses.

The company reported its third consecutive quarter of declining page views on its websites two years into the tenure of CEO Carol Bartz, who took over to try to revive its fortunes.

In October, Yahoo began outsourcing its search advertising service in the United States and Canada to Microsoft, in keeping with the 10-year search partnership the two sealed in 2009. Under the terms of the deal, Yahoo will share 12 percent of its search advertising revenue with Microsoft.

But Chief Financial Officer Tim Morse said Facebook competition was not hurting Yahoo’s display advertising business.

“All impressions aren’t created equal. With the big customers and branded advertisers, and the premium dollars being spent, we really aren’t seeing that kind of competition,” he said in an interview with Reuters.

MORE COSTS TARGETED

Morse told Reuters after Tuesday’s financial results were released that there were still more costs to come out of Yahoo in coming years.

Asked if that meant additional layoffs, Morse said: “Over the next few years, there will definitely be some more people who leave, there will be more people who are hired.”

Net revenue, which excludes revenue shared with website partners, totaled $1.2 billion in the three months ended December 31, compared with $1.26 billion in the year ago period. Analysts polled by Thomson Reuters I/B/E/S were looking for $1.19 billion in net revenue.

And it projected that net revenue in the first quarter will range between $1.02 billion and $1.08 billion, compared with the $1.13 billion expected by analysts.

Its fourth-quarter earnings also lagged targets.

Yahoo said its net income in the fourth quarter was $312 million, or 24 cents a share, compared with $153 million, or 11 cents a share in the year ago period. Analysts polled by Thomson Reuters I/B/E/S were looking for 22 cents a share.

Yahoo shares were down at $15.53 in extended trading after closing out the regular session at $16.02.

Sourcd & published by Henry Sapiecha