Australia, New Zealand’s banks face higher costs, weaker profits in H2 2023

Overall performance will be broadly similar to 2022, according to S&P Global Ratings

High inflation is driving rapid interest rate hikes in both Australia and New Zealand and will result in a more challenging environment for bank in these two countries, says S&P Global Ratings in a special report.

The banks’ solid underlying fundamentals, thorough management, and robust regulatory oversight will allow them to withstand these challenges, however, the ratings agency assured in its latest commentary, “What Investors Want to Know: Australian and New Zealand Banks.”

Expect profitability and performance to reach a high point in the first half of 2023.

Ongoing competition for loans, higher funding and impairment costs, and a slower growth environment in the latter half of the year will result in weaker profitability for the banks later in 2023.

Overall performance is expected to be similar to that of 2022, and sector outlook is stable.