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S&P raises stand-alone credit profiles of Australia's 4 major banks

S&P Global Ratings raised the stand-alone credit profiles of the four biggest Australian banks to reflect reduced economic risks for banks operating in the country.

The rating agency said Oct. 24 that it revised its stand-alone credit profile to "a" from "a-" on each of Australia & New Zealand Banking Group Ltd., Commonwealth Bank of Australia, National Australia Bank Ltd. and Westpac Banking Corp. In addition, it raised its stand-alone credit profile on ING Bank (Australia) Ltd. to "a-" from "bbb+" and on Australian Unity Bank Ltd. to "bbb-" from "bb+."

S&P said it applied lower risk weights in its capital analysis to banks' and finance companies' credit exposures in Australia due to the reduced economic risks facing Australian bank. The agency now forecasts stronger risk-adjusted capital ratios for these entities. S&P said it assessed that the national house price index has bottomed out and it expects relatively modest growth in house prices and household debt in the next two years.

Australian banks, however, remain vulnerable to imbalances arising from the still high house prices and household debt, S&P said, adding that the country's regulators are also likely to be more stringent in bank regulatory oversight.

This S&P Global Market Intelligence news article may contain information about credit ratings issued by S&P Global Ratings, a separately managed division of S&P Global. Descriptions in this news article were not prepared by S&P Global Ratings. The original S&P Global Ratings documents referred to in this news brief can be found here.