Westpac Banking Corp.

In our view, Westpac and the other Australian major banks' dependence on domestic and offshore wholesale funding remains a weakness; notwithstanding improvements over the past 10 years across the Australian banking system. The ratings on Westpac also benefit from our expectation that the Australian government is highly likely to provide timely financial support to the bank, if needed. The outlook on Westpac is stable. We expect economic risks facing Australian banks to remain low despite rising interest rates, falling consumer and business confidence, and a possibility of a rapid fall in house prices. In our base case, we project that in the next two years, house prices in Australia will fall in an orderly manner by about 15%. We forecast

...We expect Australia-based Westpac Banking Corp.'s strong market position and focus on low-risk retail and commercial banking activities in Australia and New Zealand to continue to support its earnings profile. The economies of both countries have largely recovered after the hit from the COVID-19 pandemic. However, downside risks remain as the central banks in both countries raise interest rates to tame high inflation. Westpac's robust capitalization will remain a strength to its credit profile; as will its low credit losses, which we expect to remain low and close to pre-pandemic levels for the next two years. In our view, Westpac and the other Australian major banks' dependence on domestic and offshore wholesale funding remains a weakness; notwithstanding improvements over the past 10 years across the Australian banking system. The ratings on Westpac also benefit from our expectation that the Australian government is highly likely to provide timely financial support to the bank, if needed....

Full Report