Thursday, February 14, 2013

CBA boss carefully signals independent rate cut as "plausible over time".

By Business editor Peter Ryan

The head of Australia's biggest and richest bank has flagged the possibility of an independent interest rate cut for borrowers - but not just yet.

Ian Narev, chief executive of the Commonwealth Bank, told the ABC's AM  program that a rate cut outside official Reserve Bank decisions is "plausible over time".

The carefully-worded signal on the hot issue of borrowing rates came as Commonwealth Bank yesterday revealed another record half year profit of $3.78 billion.

Mr Narev told AM there was constant pressure to deliver an independent rate cut but warned a still fragile global economy was a major consideration.

"One swallow doesn't yet make a summer so it's very important for us to see these conditions go on into this year. If we do that I think there'll be a steady rebuilding of confidence in Australia," Mr Narev said.

"We'll continue to do what we've done right through which is balance the interests of all the different stakeholders and see what our competitors are doing and consider our pricing in those contexts."

When pressed on whether an independent rate cut imminent because of falling borrowing costs, Mr Narev gave AM  a highly-qualified response:

"I'm not allowed to give forward projections as you know on pricing but it remains to say the Reserve Bank rate is one factor we take into account and it is quite plausible over time that moves could be independent of any move by the Reserve Bank."

Mr Narev admitted borrowers had a right to question monster profits and to ask when the series of out-of-cycle rate rises would be returned to customers. All banks hiked rates independently in the leadup to and after the collapse of Lehman Brothers as the cost of global funds surged.

"I completely understand that borrowers in light of the environments we've been and the fact that bank's funding is pretty complicated, there are a lot of borrowers out there who would obviously like to pay less and that's something that we obviously do understand and one of the things we take into account when we are making our pricing determinations," Mr Narev said.

Mr Narev said the Commonwealth would not be able to consider independent rate cuts until it was able to replace long term funding sourced prior to the global financial crisis with less expensive funding.

Like other banks, the CBA is also in a cut-throat war to retain and lure depositors who now rank as highly as borrowers.

Mr Narev was also asked if he was more relaxed given the apparent easing anxiety about the global economy, with stability in China and less bad news from Europe.

"I sleep okay at night generally because I have to but there's no doubt that when volatility around the world is a bit lower it makes it a little bit easier for us but we can't take that for granted because we've learnt in the history of the financial crisis things still can change pretty quickly. "

Wednesday, February 13, 2013

Australia becoming a nation of smartphone "addicts", report warns

A report out today confirms what many already suspected - Australians are becoming addicted to their smartphones.

The survey of smartphone users by the technology company Cisco reveals that the daily ritual for Generation Y Australians begins with texting.

Many of those surveyed admit they are checking for messages and updates at least once every thirty minutes and become anxious when their phone goes missing.

Cisco's chief technology officer Kevin Bloch says many people, especially from Gen Y, are crossing the border into a smartphone addiction.

Listen to my interview broadcast on The World Today.

"Literally as they open their eyes the alarm clock, which is probably on their phone, goes off. They reach out for the alarm clock, look at their updates, maybe on Facebook, maybe Twitter etc, maybe go through their email, and then they get out of bed," he observed.

"Nine out of 10 of the survey of 3,800 people under 30 years old are addicted to their smartphone and, in fact, one out of five are checking their smartphone every ten minutes."

Mr Bloch says the addiction to smartphone use is so strong for many that they have developed dangerous habits, such as texting while driving.

"It's happening subconsciously, and one out of five people are texting while they're driving, and it just speaks to this addictive, compulsive, behaviours that we're seeing," he said.

"You know, can you not put your phone down whilst you're in your car? I mean, we're talking not just about using the phone for voice, we're talking about texting while you're driving, and that's a really dangerous thing."

The Cisco report finds that it is not only Gen Y who are addicted to their mobile devices, but that the type of use varies with age.

"For example, under 30s, most of whom may not be married, their addiction will be just to be connected to their social lives, some of whom also to be connected to their work lives and so on," Mr Bloch observed.

"As you go on in life and you're established, you've got a family and so on, the addiction changes. It may be you're worried about your family so you want to stay connected and so on, but there will be different types of addictions or compulsive behaviour.

"But I think what is becoming consistent is that that smartphone is becoming the central point of contact to other services and people no matter what age you are."

Kevin Bloch says when someone's smartphone goes missing or it even starts running out of battery, they often start getting anxious.

"In the report they talk about, you know, the human body's got 206 bones and the smart phone's your 207th bone, and you'll know about it if you don't have it," he joked.Cisco's report has also found gradual changes in the etiquette surrounding mobile phone use, with more people now using their devices at the dinner table and in bed.

"Three-quarters of the people surveyed use their phone in bed, and the question about romance and all that sort of thing comes up," Kevin Bloch said.

"I think 46 per cent will use their smartphone whilst at the dinner table, and if most of the table are texting while you're trying to eat I would consider that rude, and with my family I definitely try to stop it.

"I think it does have a whole lot of negative impacts on your personal life and your personal relationships, no doubt."

Mr Bloch says people need to re-evaluate their smartphone use.

"I think people need to take a step back and understand from their own personal perspectives how addicted they are, like any drug, I
guess if I could put an analogy on it," he advised.

"Because, you know, it could touch on or infringe on things like your manners, all the way through to your work-life balance, all the way through to your personal safety."