Share prices of Australia’s “Big Four” banks were lower on Tuesday after Moody’s Investors Services cut its credit rating on the quartet and a handful of other domestic lenders owing to “elevated risks” in the household sector.
It was the first chance the banks had to react to Moody’s decision, which was delivered after the stock market closed on Monday.
ANZ Banking Group was down 0.5 per cent, Commonwealth Bank fell 0.3 per cent, National Australia Bank dropped 0.5 per cent and Westpac sank 0.3 per cent on Tuesday.
Moody’s said on Monday evening that “elevated risks within the household sector heighten the sensitivity of Australian banks’ credit profiles to an adverse shock, notwithstanding improvements in their capital and liquidity in recent years.”
The action follows Standard & Poor’s decision in May to downgrade ratings for 23 Australian financial institutions – but not the Big Four banks – and Fitch earlier this year lowering its outlook on the sector but leaving ratings unchanged.