More from the US ratings agency 18 Aug 2016

  • downgrade in outlook reflects challenges in the operating environment and to profit growth
  • affirms current ratings of all Australian banks

Say Moody's:

The banks with revised outlooks include Australia's four major banks, Australia and New Zealand Banking Group Limited (ANZ), Commonwealth Bank of Australia (CBA), National Australia Bank Limited (NAB), and Westpac Banking Corporation (Westpac). All four banks are rated Aa2 for senior unsecured debt.

Moody's has also revised the rating outlook of Members Equity Bank Limited (ME Bank). The bank is rated A3 for senior unsecured debt.

The outlook change for Australia's four major banks reflects Moody's expectation of a more challenging operating environment for banks in Australia for the remainder of 2016 and beyond, which could lead to a deterioration in their profit growth and asset quality, as well as an increase in their sensitivity to external shocks.

In particular, the rating action reflects (a) Australia's ongoing economic transition which, despite stable aggregate economic growth, has resulted in low nominal income and wage outcomes and persistently low interest rates, exerting in turn downward pressure on the banks' profit growth; (b) Moody's continued concerns regarding the banks' exposure to tail-risks in the Australian housing market, which has been characterised over the recent past by strong price appreciation and rising household debt; and (c) rising bad debt within parts of the banks' lending portfolios, in part reflecting these pressures.

Full report here ( and it's a long one so well worth a read to AUD traders)

AUDUSD dipping below 0.7700 again.