Moody’s Investors Service has given Australian banks some not so good news, cutting it’s ratings outlook to negative as a result of a slowing economy and mounting debts.
In the first time since the 1991 recession, Australia’s big four banks have had a negative outlook on their AA ratings. The ANZ, Commonwealth Bank, Westpac and NAB all received negative ratings.
Moody’s expects Australia’s economic growth to go backwards this year, with unemployment expected to rise, driving up lending losses for banks.
“The negative outlook reflects the potential for the deepening global economic downturn to have a protracted impact on the banks’ asset quality and earnings,” said Moody senior vice-president, Patrick Winsbury.
The news comes after Treasurer Wayne Swan predicted Australia is not far off from a recession, with the backlash of slowing US and Asian economies expected to have a dramatic impact on our economic growth.