Moody's Investors Service has downgraded the long-term ratings and two other assessments of 12 Australian banks in response to elevated risks in the housing market. Moody's said this had heightened the sensitivity of the banks' credit profiles to an adverse shock.
Moody's also downgraded the banks' Baseline Credit Assessments (BCAs) and Counterparty Risk Assessments (CRAs).
At the same time, Moody's affirmed the BCAs, long-term ratings and CRAs of another six Australian banks and their affiliates, reflecting the balance sheet buffers and resilience to potential shocks for these banks, the agency said.
Following these actions, the rating outlooks of 16 banks are now stable, while two remain negative.
Moody's has also downgraded the insurance financial strength rating of one lenders mortgage insurer, and placed the insurance financial strength
rating of another on review for downgrade.
The banks and their affiliates that have been downgraded are:
ANZ,
CBA,
NAB,
Westpac,
Bendigo and Adelaide Bank, Heritage Bank, Members Equity Bank, Newcastle Permanent Building Society, QT Mutual Bank, Teachers Mutual Bank, Victoria Teachers Mutual Bank and
Credit Union Australia.
Specifically, the long-term ratings of Australia's four major banks, ANZ, CBA, NAB and Westpac, were downgraded to Aa3 from Aa2, their BCAs downgraded to a2 from a1, while their short-term ratings were not changed and affirmed at P-1.
The long-term ratings of Newcastle Permanent Building Society and Bendigo and Adelaide Bank were downgraded to A3 from A2, with the
remaining banks downgraded to Baa1 from A3.
The banks and their affiliates with ratings remaining unchanged and which have been affirmed are: AMP Bank,
Bank of Queensland,
HSBC Bank Australia, Citigroup, Suncorp-Metway and Macquarie Bank.
The rating outlooks for the following banks have been revised to stable from negative: ANZ, CBA, NAB, Westpac and Members Equity Bank.
The rating outlooks for the following banks remain unchanged at stable: Bendigo and Adelaide Bank, Citigroup, Heritage Bank, Newcastle Permanent Building Society, QT Mutual Bank, Teachers Mutual Bank, Victoria Teachers Mutual Bank and Credit Union Australia, Bank of Queensland, Suncorp-Metway and Macquarie Bank.
The rating outlooks for AMP Bank and HSBC Bank Australia remain unchanged at negative, as a result of the negative rating outlooks for their parents.
Moody's has also downgraded the insurance financial strength rating of Westpac Lenders Mortgage Insurance (WLMI) to A1 from Aa3, and revised its rating outlook to stable from negative. WLMI is a mortgage insurance subsidiary of Westpac. The subsidiary's rating incorporates Moody's assumption of affiliate support from Westpac, and the rating action reflects the change in the rating and outlook of its parent.
Moody's has also placed the A3 insurance financial strength rating of Genworth on review for downgrade.
