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Tough outlook for building societies

by Staff Reporter7 minute read

A new report on building societies has labelled the sector’s outlook negative.

According to Moody’s Investors Service’s Australian Building Societies: 2009 Industry Outlook , released yesterday, the credit forecast for building societies is negative as a result of the weakening economy and increasing funding pressure.

“After years of enjoying ample lending growth, assisted by rising house prices and falling unemployment, the building society sector is now experiencing a period of much slower loan growth, which is impacting profitability levels,” Moody’s assistant vice president Marina Ip said.

ABACUS CEO Louise Petschler however said the industry body did not share Moody’s view of the outlook for the sector.

“The economic environment clearly makes for more difficult operating conditions than in previous years,” she said. 

“[But] they have very strong capital levels, non-accrual loan levels at less than a third of the banks and solid profitability I’d say that Australian building societies are in very good shape.”

 

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