Stable outlook on Australia’s banking sector in 2016 – Fitch Ratings

By FXStreet FXStreet (Bali) – Fitch Ratings has maintained a stable outlook on Australia’s banking sector in 2016.

Headlines

Expect strengthened capitalisation and recently tightened underwriting standards to offset slower profit growth and modest asset-quality pressure

Profit growth likely to slow due to ongoing asset competition, higher funding costs, and a modest increase in loan-impairment charges

Australia’s household debt is likely to remain high in 2016, making borrowers sensitive to increased unemployment and higher interest rates

Expect house-price growth to moderate

Economic growth is likely to benefit from stronger household spending, which could either reduce Australia’s savings rate or increase household debt

Unemployment rate is expected to remain relatively stable in 2016 before modestly improving in 2017

Expects Australia’s credit cycle to turn in 2016, although any weakening in asset quality should remain manageable

Expect banks to continue to strengthen their capital positions
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Source:: FX Street