Commonwealth Bank of Australia shares fell to their lowest level in more than a month as speculation mounted the federal budget would slap the nation’s biggest lenders with a new tax.
CBA led its main rivals lower dropping 3.9% to $82.02 Tuesday compared with a 0.5% fall for the benchmark S&P/ASX200 index.
ANZ fell 2.6%, NAB slipped 2% and Westpac dropped 3.5%
Australia’s big four banks will face a new tax on balance sheet liabilities in the 2017 federal budget which is said to raise $6 billion over four years, the Australian Financial Review said. Treasury Secretary John Fraser will call the big four bank chief executives on Tuesday night at 6.30 pm before the budget, banking sources said.
The four major banks posted 6.25% increase in 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.
A levy of $6 billion over four years would require the major banks to boost their net interest margin by 7 basis points, which in turn would need them to raise mortgage rates by 14 basis points, Goldman Sachs analysts led by Andrew Lyons said in an investor note.
While CBA’s quarterly update showed the nation’s largest lender was on track for another record annual earnings, it revealed falling net interest margins.
Australia’s largest banks are also bracing themselves for higher capital requirements and a slowdown in mortgages after the regulator introduced more lending curbs.