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Majors unaffected by US banking regulatory change

Staff Reporter 1 minute read

Banking regulatory changes proposed by the US government last week are unlikely to directly impact the future earnings and performance of Australian banks, according to an analyst.

Deutsche Bank analyst James Freeman told The Australian that the banking regulatory changes proposed by the US government - which involve restricting the profitable trading carried out by commercial banks - would not have a direct impact on Australia’s banking performance in 2010.

Mr Freeman said Westpac’s earnings are expected to grow by 4.5 per cent, while ANZ’s earning are tipped to grow by 3.9 per cent, despite the tightening of banking regulation overseas.

“[The US legislation] would have a material impact on some international banks... But the actual impact on Australian banks is likely to be relatively small, even if it is enacted globally,” Mr Freeman said.

According to Mr Freeman, bank margins are likely to remain flat for about 18 months, but there would be a general recovery in bad debts.

“All the banks end up being roughly the same when it comes to bad and doubtful debts... However, the shape of the recovery is slightly different, with CBA and Westpac getting there a little quicker than ANZ,” he said.

Majors unaffected by US banking regulatory change
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