Picture emerges of banks' health
With Westpac the latest big bank to update investors, a clear picture is emerging of the health of nation's financial system.
Major banks are well capitalised; are enjoying a surge in lending and trading revenue. Interest margins are under pressure, but are being contained.
Of course all of this has been overshadowed by rapidly rising provisions over recent months, which combined with wealth management markdowns are pulling down cash earnings and potentially crimping dividends.
Interestingly, soured corporate debts are a still being drawn from the existing pool of known names - in Westpac's case Babcock & Brown, ABC Learning and Allco Finance Group drove its $800 million increase in provisions.
Westpac has confirmed that few signs of real stress have yet to emerge across consumer portfolios, with losses in mortgages to small-to-mid sized business loans well contained even as the economy slows.
For Westpac this is an area that stands to be a potential flashpoint given its overweight position in New South Wales, particularly through its acquisition of St George Bank.
However stress does appear to be growing up the business chain, with middle-sized corporate loans now hitting watchlists. This is not just contained to property development but also retail, mining services manufacturing and some financial services.
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