"There's now a little bit more worry about this demand shock here in Australia,and globally,"she said."The longer it drags on,the more impact it will have on the economy,"Ms Liu said.

Even so,Ms Liu said central banks and governments were working to restore confidence,and there cold be"a V-shaped recovery"once there was confirmation the virus had been contained.

Bell Potter analyst TS Lim said banks with greater exposure to small and medium enterprises could bear more of the brunt from rising bad debts,while slower economic growth would also mean less credit growth for the sector."It's going to hit income and expenses,"Mr Lim said.

Issuance of new bank wholesale debt also slowed sharply last month,after a flurry of borrowing by the local banks on global markets in January. Credit expert Phil Bayley,principal of ADCM Services,said Australia's banks had raised just $2.6 billion in overseas markets in February,down from $21.5 billion in January.

There are also signs investors are growing more nervous about the risk of default by large corporate borrowers,as measured by financial instruments known as credit default swaps.

Mr Bayley said the iTraxx index,a gauge of credit risk for 25 large Australian bond issuers,had increased in recent weeks,though it remained lower than in January last year."On a relative basis,it's not that bad,"Mr Bayley said.