Fitch: Australia’s banks to see slow profit growth in 2018

The US-based ratings agency, Fitch Ratings published its latest review on the Australian banking sector, with the key points found below.

Global monetary tightening pushes up funding costs, loan-impairment charges rise, and tighter regulation.

These to slow profit growth this year for the banks in Australia.

Business volumes to slip and compliance costs rise.

Australian banks are more reliant on offshore wholesale funding than global peers.

Global monetary tightening could, therefore, push up banks' funding costs.

The impact is likely to be contained by banks' hedging of foreign-currency borrowing back to Australian dollars, while only a portion of the wholesale funding is refinanced each year.