Excuse me for being cynical. On its 2015-16 interim profit Westpac managed to generate a 3% rise in cash profit to $3.9 billion, on a 5% rise in revenue to $10.47 billion, and a 1% lift in interim dividend to 94 cents a share (after not moving the interim a year ago). It was all tiny stuff and, as a result, the bank’s much cherished return on equity (ROE) target of 15% was left behind as the figure fell 1.66 percentage points to a still fat and prosperous 14.2%. The bank lowered its cost to income ratio to 41.6% by 0.85% (which helped), but it had to lift its impaired loan provision 96% (now that’s a big headline grabber) to $667 million, thanks to four unidentified bad debts totalling $252 million. Lending and customer deposits grew by 6% and 5% respectively.

So where’s the reason to be cynical? Well, Westpac boosted its home lending rates for investors and owner-occupiers last October and justified the increase by pointing to the move by regulators to force it (and other banks) to hold more capital. Customer deposit rates were cut last December, after the bank had lifted investor home loans twice and owner-occupier rates once. Then, in February of this year, Westpac lifted its fleet of loan and other rates to commercial customers by between 0.19% and 0.30%. The bank blamed higher wholesale funding costs, even though Reserve Bank governor Glenn Stevens had told the House of Representatives Economics Committee a few days earlier: “I do not see much of a case for independent increases in lending rates based on funding costs as they have evolved just lately.”

Lifting rates for all its customers at least once in the past few months, and twice for property investors, has protected Westpac from reporting a fall in earnings and an even larger fall in its ROE, which is what all banks target. That ROE is also a key part of measuring executive performance. It is still seven times the RBA’s cash rate of 2%. At a time of weak or non-existent inflation, that high ROE is still highly excessive. No wonder Westpac and the other banks don’t want a royal commission to disturb the tidy way they continue to milk Australian households and businesses. Investors were not fooled by Westpac’s nudging. Westpac shares fell more than 4% this morning as the report got a big thumbs down, especially the rise in bad debts (one of which is Slater & Gordon, which has just revealed a deal with its banks that prevented its collapse). Other bank shares also sold off and the ASX 200 was down 50 points just before 11 am. Nice one Westpac. — Glenn Dyer

What is Norwegian for ‘overpaid’? All those comfy performance-driven boards and senior managements of some of our largest companies face a new difficulty at the 2015-16 AGM season later this year: the world’s biggest sharemarket investor, Norges Bank Investment Management — Norway’s sovereign wealth fund — has decided to take a stand on executive pay and is searching for a target company and its pay policies to make the point. The Financial Times has reported on this change of stance at the huge Norwegian fund (US$870 billion) in the past year or so. But up until now the fund has been willing to criticise, but not actively lobby and vote against pay policies it doesn’t like at big companies. But that stance has changed and the fund has now decided to intervene directly at companies where it disagrees with the pay polices for the CEO compared to the company’s performance. The FT points out the importance of this change of heart is that the Norwegian funds owns an average of 1.3% of almost every listed company around the world, including Australia. The more questioning stance follows a number of high-profile pay rows (such as at BP, where the CEO was paid millions in bonuses, despite the company incurring a massive loss in 2015) in the past year. One to watch locally here could be BHP Billiton where there are growing calls for board renewal. Rupert Murdoch’s News Corp is another where the pay policies and other issues have generated a lot of opposition from US investors. — Glenn Dyer

No hedging from Buffett. Legendary US investor and businessman Warren Buffett has again unloaded on the hedge fund industry. Speaking at the annual meeting of his Berkshire Hathaway company in Omaha, Nebraska, he told 40,000 people that “supposedly sophisticated people” and institutions are being fleeced by hedge funds and their backers. While he has made similar comments in the past, the latest, made on Saturday, are the most direct and come as the huge hedge fund industry wears big losses from poor investments and the start-of-year volatility in financial markets. Many well known hedge funds have experienced double-digit falls in asset backing this year, some have closed, while others have stopped redemptions and restructured.

“There’s been far, far, far more money made by people in Wall Street through salesmanship abilities than through investment abilities,” Buffett told the meeting. “Now that may sound like a terrible result for hedge funds, but it’s not a terrible result for the hedge fund managers … I hope you realize that for the population as a whole, American business has done wonderfully, and the net result of hiring professional management is a huge minus … Supposedly sophisticated people, generally richer people, hire consultants. And no consultant in the world is going to tell you, ‘Just buy an S&P index fund and sit for the next 50 years’. You don’t get to be a consultant that way, and you certainly don’t get an annual fee that way.”

— Glenn Dyer