(11 December 2012 – Australia) Moody’s believes profits for Australia’s major banks will stagnate in 2013 and the weakening economy will cause a rise in bad debt charges.’Profitability metrics are likely to stay strong by international comparison, but profit growth is expected to stagnate in the current low credit growth environment.’
Cash profit growth was four percent in 2011/12 and was the slowest rate in several years, despite pulling in A$22.8 billion in net profits, while cash profits totaled A$25.2 billion.
Moody’s also forecast a rise in bad debt charges for the banks, as businesses and consumers come under financial hardship. But those charges are not expected to top historical averages.
Separate research forecasts a challenging year ahead for the sector’s smaller players, such as credit unions and customer owned mutual banks.