Credit losses are projected to double for Australian banks in the midst of economic headwinds from the coronavirus outbreak.
Domestic non-performing loans are expected to reach 0.3 percent, according to an S&P Global statement, nearly doubling 2019 levels. Although the figure is relatively low compared to global peers, «a longer lasting and more severe impact than our revised base case could trigger significant problems for the Australian banking system,» the ratings agency added, highlighting the tourism and education sectors as prime victims.
This week, the Reserve Bank of Australia joined its central banking peers in easing by indicating it would implement a quantitative easing program through asset purchases.
«Do the Right Thing»
Earlier this month, Australia’s «big four» banks made a rare move by uniformly passing the full 0.25 percent central bank rate cut to borrowers, boldly withstanding pressures to improve profitability. And moving forward, S&P expects similar behavior.
«We expect that the Australian banks would aim to 'do the right thing' by their customers and broader society to meet community expectations,» S&P Global said.
