Ratings agency Fitch has released a report predicting subdued profit growth from Australian banks, caused by a weakening economy and increased competition.
Here’s some of the key takeouts from the report (which we saw at the AFR), that warns profit growth will be “modest at best”:
“Profit growth is likely to be modest at best – due to higher impairment charges and net interest margin pressure from strong loan competition, partially offset by moderately higher credit growth and a reduction in funding costs.
“Cost management should remain a key focus for the Australian banks. Wealth management and measured expansion into Asia provides earnings diversification for the larger banks.
“Household leverage remains high, although declining modestly, leaving bank asset quality somewhat vulnerable to a significant rise in unemployment and/or higher interest rates.”
There’s more here.
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