More from Moody’s:
Our outlook for the Australian banking system is negative. This outlook expresses our expectation of how bank creditworthiness will evolve in the system over the next 12-18 months.
Australian banks will likely face a number of headwinds over the next 12 to 18 months, including slower profit growth and increasing sensitivity to internal and external shocks. Low interest rates and moderately increased credit costs, as the result of continued economic transition, will reduce profit growth. This is in turn likely to constrain capital generation at a time when capital intensity is rising. At the same time, higher household indebtedness, in the face of rising house prices and low wage growth, has increased tail risks in the housing market.
