Australian banks’ long road to recovery
Australian banks will continue to be weighed down by the negative sentiment from their United States peers, with a recovery in the short-term looking unlikely, according to a research report from Austock Securities.
This follows the latest data to come out of the Federal Reserve on commercial bank arrears rates and losses, which shows that the US situation is ‘starting to bite into’ bank asset quality.
“We think that many of the concerns that have derailed Australian bank shares in the past year, such as credit quality doubts and higher wholesale funding costs, are essentially American imports,” Austock diversified financial services analyst John Buonaccorsi said.
“We don’t see much scope for Australian banks to recover until their US counterparts have bottomed out [and], in our view, the short-term prospects for US bank shares are weak.”
As such, Austock is remaining underweight on the Australian banking sector.
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