Commonwealth Bank of Australia will reveal the impact of the RBA’s rate tightening on Q4 earnings, but analysts are warning the bad debt cycle will turn.
Australia’s biggest banks are expected to report stronger quarters on the back of the brutal cycle of rate increases which is likely to continue on Tuesday, with analysts tipping homeowners’ pain will translate into earnings gains for banks that will extend throughout the rest of the year before potentially triggering a spike in bad debts next year.
ank of Australia interest rate increases have buoyed earnings. Bendigo and Adelaide Bank will follow on August 15, while other major banks will provide quarterly updates. “We believe the near-term earnings outlook is positive, but the operating environment has shifted, and the recent trading multiple derating is warranted given a higher probability of the bear case,” Mr Wiles said in an investor presentation on Australian banks.
“We believe this creates more challenges for banks than a gradual and measured tightening cycle,” he said.
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