Australian banks’ credit costs to rise moderately – Moody’s

By FXStreet FXStreet (Bali) – In a Moody’s report titled “Heard From the Market: Macroeconomic Risks and Evolving Regulations Dominate Investor Concerns”, the rating agency notes that mining regions are starting to see signs of stress as the unwinding of the global commodities cycle continues.

Official report – Moody’s

Moody’s Investors Service says that the unwinding of the global commodities cycle is heightening the macroeconomic risks faced by Australian banks, as the regions and sectors most exposed to mining are starting to see some signs of stress.

“Although the banks’ direct exposure to the resources sector is relatively low, they face high second-order risks from a potential sharp downturn,” says Ilya Serov, a Moody’s Vice President and Senior Credit Officer.

“These risks are somewhat mitigated by the current low interest rates and the relatively healthy state of Australian corporate balance sheets and, on balance, we expect the banks’ credit costs to increase only moderately from the current low levels,” adds Serov.

Moody’s conclusions were contained in a new report on Australian banks, and which addresses the concerns of the market after Moody’s analysts in late November and December 2015 met with over 40 key investors and credit research analysts in the UK, Germany, Switzerland and the US.

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Source:: FX Street