Bulletin: Westpac Can Handle Higher Credit Loss Provisions

MELBOURNE (S&P Global Ratings) May 4, 2020--Westpac Banking Corp.'s (Westpac; AA-/Negative/A-1+) strong capital base, its decision to defer its interim dividend, and the strength of its domestic banking franchise provide a good buffer for the Australian major bank to absorb higher loan loss provisions, S&P Global Ratings said today. The increased credit loss provisions, weakened earnings, and dividend deferral announced by Westpac in its half-year results today stem largely from the COVID-19 outbreak and were in line with our expectations. We forecast that a contracting economy, weak business and consumer confidence, falling property prices, and high unemployment due to the COVID-19 outbreak and containment measures will further increase Westpac's, and other Australian banks', credit losses in the next year or

...May 3, 2020 MELBOURNE (S&P Global Ratings) May 4, 2020--Westpac Banking Corp.'s (Westpac; ##-/Negative/A-1+) strong capital base, its decision to defer its interim dividend, and the strength of its domestic banking franchise provide a good buffer for the Australian major bank to absorb higher loan loss provisions, S&P Global Ratings said today. The increased credit loss provisions, weakened earnings, and dividend deferral announced by Westpac in its half-year results today stem largely from the COVID-19 outbreak and were in line with our expectations. We forecast that a contracting economy, weak business and consumer confidence, falling property prices, and high unemployment due to the COVID-19 outbreak and containment measures will further increase Westpac's, and other Australian banks', credit losses in the next year or so, to about 85 basis points (bps) of their gross loans and advances. Subsequently, we expect that Westpac's credit losses will ease to about 50 bps of gross loans and...

Bulletin