Outlook for Big 4 stable, says S&P
(9 December 2004 – Australia) Standard & Poor’s Ratings Services has affirmed its ‘AA-/A-1+’ counterparty credit ratings on Australia’s four major banks in Australia.
The ratings agency said the outlook for each of the banks was stable, despite their growth ambitions and profitability prospects moderating with the slowdown in the property market.
S&P’s financial services director Peter Sikora said Westpac, Commonwealth Bank and ANZ all reported solid improvements in underlying profitability in fiscal 2004 on the back of a favourable operating environment.
He said the exception was National Australia Bank "whose business franchise has suffered commensurate mainly with the identification of large foreign exchange option losses in January 2004".
"Net interest margins have come under increasing pressure this year, with all four banks developing and implementing strategies aimed at sustaining good business volume growth in the new fiscal year to help offset the adverse effect on profitability," Sikora said.
"Moderating economic factors, such as the high level of private sector indebtedness, together with emerging evidence that the property market has slowed, will challenge the four major Australian banks in maintaining the momentum of improvement in operating performance reported in fiscal 2004."
S&P’s financial services director Peter Sikora said Westpac, Commonwealth Bank and ANZ all reported solid improvements in underlying profitability in fiscal 2004 on the back of a favourable operating environment.
He said the exception was National Australia Bank "whose business franchise has suffered commensurate mainly with the identification of large foreign exchange option losses in January 2004".
"Net interest margins have come under increasing pressure this year, with all four banks developing and implementing strategies aimed at sustaining good business volume growth in the new fiscal year to help offset the adverse effect on profitability," Sikora said.
"Moderating economic factors, such as the high level of private sector indebtedness, together with emerging evidence that the property market has slowed, will challenge the four major Australian banks in maintaining the momentum of improvement in operating performance reported in fiscal 2004."
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