The big four face rising credit losses but they will be able to absorb the shock,says S&P.Credit:Ryan Stuart
It came as analysts emphasised that Australia's banks were in a vastly different position to where they were during the global financial crisis,and the challenge ahead would be driven by bad debts rather than the plumbing of the international financial system.
Government support for the economy,whichsome think could include a scheme to encourage banks to provide cheap loans to keep businesses afloat during the crisis,is also expected to limit the damage for banks.
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Banks have in recent years seen unusually low rates of customers defaulting,but S&P said it thought these would almost double,to about 0.3 per cent of gross loans and advances. It said that would still be low compared with banks overseas.
Business customers,especially those in hard-hit sectors such as tourism,are expected to drive the increase in bad debts,with mortgage arrears dependent on the unemployment rate.
"We expect that business loans will contribute to most of the initial increase in credit losses for the Australian banks,with the travel,hospitality,retail-services and transport-related sectors likely to be among the more severely hit,"S&P said.
It said there could be"second-order"effects on the banks through rising job losses and unemployment but maintained economic growth would rebound once the crisis had passed.