Westpac Banking Corp.

The outlook on Westpac is stable. We see limited downside to economic risks facing Australian banks in the next two years, including when stronger credit and house price growth resumes on the back of resurgent immigration and limited housing supply. We forecast Westpac's credit losses would remain low and close to pre-pandemic levels, at about 15 basis points (bps) of customer loans. Consequently, the bank's earnings will likely remain sound, supported by rising interest rates. Westpac is likely to maintain a strong risk-adjusted capital (RAC) ratio of 11.1%-11.6%. We see upside to our ratings on hybrids issued by Westpac and the stand-alone credit profiles (SACPs) of all Australian banks. This reflects a one-in-three likelihood that Australian banks will face reduced

...Australia-based Westpac Banking Corp. should be able to maintain its earnings profile. Support will come from the bank's strong market position and focus on low-risk retail and commercial banking in Australia and New Zealand. Despite rapid increases in consumer prices and interest rates, and a recent fall in house prices, the economies of both countries have a solid outlook. Unemployment should remain low. Westpac's robust capitalization will remain a strength to its credit profile. Credit losses should remain low and close to pre-pandemic levels for the next two years. The dependence of Westpac and other Australian major banks on domestic and offshore wholesale funding remains a weakness, in our view. This is notwithstanding improvements in the past 10 years across the Australian banking system....

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