Big banks are 'weathering credit crisis'
Article by Mozo
While Australian banks are likely to see profits fall as consumers react to the shrinking availability of low-interest home loans and cheap credit cards, many are still well poised to weather the current financial storm.
The Australian reports that so far, they have certainly fared better than US and UK banks, which have taken a battering this week in the wake of the collapse of America’s fourth-biggest investment bank Lehman Brothers.
“Australian banks, particularly the larger, more diverse institutions, appear to have withstood the pressures of the ongoing credit crisis relatively well,” said Tim Roche, a money expert at Fitch ratings agency.
The group went on to note that while things will certainly be tough in the months ahead, the strength of the domestic home loans market should keep things from going under.
Aussies have the added incentive to keep up with payments because, unlike in the US, national rules allow banks to claim full ownership of a borrower’s assets, Roche said.
Elsewhere, the Australian Associated Press has reported that many buyers are currently looking for variable rate home loans in anticipation that major banks will drop rates again soon.