Moody’s Investors Service cut the long-term credit rating of Australia’s four biggest banks, saying surging home prices, rising household debt and sluggish wage growth pose a threat to the lenders.
Australia & New Zealand Banking Group Ltd., Commonwealth Bank of Australia, National Australia Bank Ltd. and Westpac Banking Corp. were all downgraded to Aa3 from Aa2, Moody’s said in a statement released Monday. The ratings outlook for all four lenders is stable, Moody’s said.
“Risks associated with the housing market have risen sharply in recent years,” Moody’s said in the statement. While a sharp housing downturn isn’t its core scenario, “the tail risk represented by increased household sector indebtedness becomes a material consideration in the context of the very high ratings assigned to Australian banks,” Moody’s said.