Australian banks are well-positioned to deal with the pressures emanating from the recent bank runs in the United States, but their margins could be squeezed by the fierce competition for deposits, increased cost of funding and higher bad debts, brokerage UBS said.
The brokerage prefers diversely funded banks, specifically with a larger share of retail lending amid tighter banking regulations and rising deposit costs, it said in a note to clients on Tuesday.
Australian banks are “well regulated” and carry strong liquidity coverage ratios, UBS said.
However, it slashed the net interest margin forecasts for the major lenders amid increasing risk of global contagion and a weakening credit environment in the country.
Source : UBS Predicts Fallout from U.S. Banks Will Exacerbate Margin Headwinds for Aussie Lenders