Moody’s cuts its outlook for Australia’s banking system to negative from stable

Key findings

"While Australian banks' current asset quality is very strong, it will deteriorate significantly if disruptions persist for a prolonged period and push up the unemployment rate, which will lead to more impairments of residential mortgages, which comprise approximately two thirds of banking system loans.”

"We view the current economic support packages, including fiscal stimulus, enhanced financial market liquidity and term funding to support credit intermediation, as measures that are temporarily increasing the level of indirect government support for the banking.”