Westpac’s Lloyds Deal Points To Limited Growth Options


News : Australian banking corporation Westpac has acquired the Australian assets of UK financial services providers Lloyds , according to Reuters. Analysts have pointed to the sale as a sign of the difficulty Australian lenders have in working to achieve meaningful growth in the domestic market. The difficulties spring from the nation ' s regulatory curbs, which prevent the four firms t hat control 80% of the nation ' s banking assets from merging with each other.

BMI View: While monetary easing has seen funding costs edge lower, there are growing signs of trouble facing debt-reliant businesses and households, with loan losses likely to rise over the coming quarters. Indeed, the central bank has highlighted the vulnerability of companies providing services related to the mining industry, and residential mortgages-backed securities (RMBS) have seen a persistent rise in arrears of late. We maintain our downbeat profit outlook for the banking sector and highlight the growing risk to the fiscal accounts as authorities provide safety nets rather than implementing reforms to make the financial system more resilient.

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Geography: Australia

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