Australian banks are strong and should be well positioned to handle the turmoil currently enveloping global markets, Fitch Ratings announced today in its semiannual review and outlook of the nation’s banks.
“Fundamentally, Australian banks appear to be in good shape, with solid profitability and excellent asset quality, while having only limited exposure to US sub-prime mortgages and related structured credit products,” said Tim Roche, associate director in Fitch’s Financial Institutions group.
The agency has noted however that a prolonged liquidity crunch may result in banks moderating their lending activity to reflect a reduced funding capacity.
According to Mr Roche, the banks may have to ‘ration’ credit should the current liquidity crisis continue.
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