Moody’s lowers its outlook for Australia’s banking system to negative from stable

2 Apr 2020 01:28 PM

Moody's lowered its outlook for Australia's banking system from stable to negative during Thursday morning. The rating agency cited "the widespread economic and market turmoil from coronavirus outbreak."  

While the quality of the current assets of Australian banks is very strong, they will deteriorate significantly if the turmoil continues for a long time raising the unemployment rate, which will lead to a further weakening of residential mortgages, which constitutes nearly two-thirds of the banking system's loans.  

The agency emphasised current economic support packages, including fiscal stimulus, improved financial market liquidity and financing to support credit intermediation, as measures that temporarily increase the level of indirect government support to the banking system. 


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