SYDNEY — Australia’s major banks lost $16.5 billion of their market value this week as they emerged as the biggest losers from the federal budget.
Commonwealth Bank of Australia, the largest of lenders slumped 3.4% this week. That move shaved away more than $5 billion from the Sydney-based lenders market value. ANZ fell 5%, NAB slipped 1.5%, Westpac slumped 4.3% and Macquarie ceded 2.5% this week.
The S&P/ASX200 Financials Index fell 2.4% while the benchmark S&P/ASX200 index ended little changed.
Federal treasurer Scott Morrison on Tuesday unveiled a major bank levy, a six-basis point charge on the big banks’ liabilities aimed at raising $6.2 billion over four years. The tax starts from July 1 and will only affect five lenders with assessed liabilities of $100 billion: the ANZ, CBA, NAB, Westpac and Macquarie. Also, senior executives will be held to account at these lenders.
That levy is expected to erode profit by as much as 6% and a chew into the major banks return on equity assuming the lenders don’t raise interest rates, a calculation by analysts at Deutsche Bank and CLSA showed.
The banks have said the cost of the levy will eventually be borne by shareholders, borrowers and employees.
The share price fall was also exacerbated by a not so flattering interim results from the lenders, which showed net interest margins continuing to decline and a fall in revenue growth. The lenders managed to boost earnings largely by cost cuts and reducing the money they set aside to cover bad debts.
The four major banks posted a combined underlying cash profit of $15.63 billion in the first six months of their financial years. This was an average rise of 6.25% in an increasingly competitive environment.
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