Steady as she goes for Westpac and NAB, Fitch says
(10 May 2005 – Australia) Fitch Ratings have reaffirmed the ratings of National Australia Bank and Westpac following reviews of both banks.
Fitch affirmed Westpac’s rating of Long Term ‘AA-’ with a ‘Stable’ Outlook, Short Term ‘F1+’, Individual ‘B’ and Support ‘2’.
The ratings agency said Westpac, which posted an interim operating profit after tax of A$1.33 billion last week, had a robust credit risk management framework, a strong ability to generate capital internally and sound asset quality.
"Continued growth in mortgage lending, strong lending growth to businesses and a significant improvement in investment revenue from the fund management unit all contributed to a substantial 17.7 percent increase in net income in FY04 to A$2.58 billion," Fitch said.
Fitch said the biggest challenges facing Westpac and other Australian banks were the cooling housing market and increased competition.
"Margin contraction is likely to continue as competition intensifies for housing loans, with flow on effects felt in the corporate and SME lending space."
Fitch also reaffirmed NAB’s Long Term ‘AA’ with a ‘Stable’ Outlook, Short Term ‘F1+’, Individual ‘A/B’ and Support ‘2’.
Fitch said NAB, which reports its interim result tomorrow, had generally robust credit risk management framework, a strong ability to generate capital internally and prominent and a diverse banking and fund management business.
"Several incidents affected NAB’s performance in FY04. These include losses totalling A$360 million from unauthorised foreign currency options trading, a number of changes in management, large software write-offs, and a post year end, a self-insured theft from one of the bank’s Irish subsidiaries," Fitch said.
But Fitch said these events could have a "silver lining" in the bank’s need for reform. It said the streamlining and simplification of the bank’s overall business was a positive step.
The ratings agency said Westpac, which posted an interim operating profit after tax of A$1.33 billion last week, had a robust credit risk management framework, a strong ability to generate capital internally and sound asset quality.
"Continued growth in mortgage lending, strong lending growth to businesses and a significant improvement in investment revenue from the fund management unit all contributed to a substantial 17.7 percent increase in net income in FY04 to A$2.58 billion," Fitch said.
Fitch said the biggest challenges facing Westpac and other Australian banks were the cooling housing market and increased competition.
"Margin contraction is likely to continue as competition intensifies for housing loans, with flow on effects felt in the corporate and SME lending space."
Fitch also reaffirmed NAB’s Long Term ‘AA’ with a ‘Stable’ Outlook, Short Term ‘F1+’, Individual ‘A/B’ and Support ‘2’.
Fitch said NAB, which reports its interim result tomorrow, had generally robust credit risk management framework, a strong ability to generate capital internally and prominent and a diverse banking and fund management business.
"Several incidents affected NAB’s performance in FY04. These include losses totalling A$360 million from unauthorised foreign currency options trading, a number of changes in management, large software write-offs, and a post year end, a self-insured theft from one of the bank’s Irish subsidiaries," Fitch said.
But Fitch said these events could have a "silver lining" in the bank’s need for reform. It said the streamlining and simplification of the bank’s overall business was a positive step.
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