Banks on top of debt: Fitch report

The latest biannual Fitch Ratings research report states that the major Australian banks are dealing well with the current climate of rising rates and their impact on debt-ridden households.

The report states that consumer debt is one of the “black spots” in the Australian banking scene, which otherwise is healthy, despite some risks for the banks in hiking up rates due to the economic conditions.

The Commonwealth Bank and the National Australia Bank were both rated AA by Fitch, with ANZ and Westpac being rated AA- over the long term. The CBA is seen as strong in retail banking, while the NAB's strength is small business. Both are rated higher than the AA- banks due to their diversity, for example strength in wealth management, though Fitch's John Miles does not see a huge difference between the two rankings. Westpac and ANZ are “strong AA- and pushing towards AA”, he said.

Australian banks are continuing to maintain conservative lending policies, Mr Fitch concluded, and this prudent approach is unlikely to change.

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