The rating outlook on ANZ is stable. We see limited downside to economic risks facing Australian banks over the next two years. We expect modest growth in house prices over the period. Resumption of immigration-driven population growth along with limited new housing supply should continue to support house prices. We forecast ANZ's credit losses will remain low, at about 15 basis points (bps) of customer loans. Consequently, the bank should maintain sound earnings. We expect our RAC ratio for ANZ to fall to 11.0%-11.5% over the next two years. The completion of its proposed acquisition of SML is the primary reason for the decline. The ratings on ANZ have substantial headroom on the downside. Downgrade scenarios are highly unlikely, but
