Aussie bank earnings expected to slide
Global ratings agency Fitch Ratings expects Australian banks' earnings to slide during the second half of fiscal 2009 as impaired assets rise and a recession in Australia sets in.
Fitch is forecasting a 0.8 per cent contraction for Australia's gross domestic product (GDP) in 2009 as consumer spending slows for the first time in 47 years and bank lending continues to contract.
The local credit crunch has seen double-digit loan contractions for owner-occupied investment, housing and commercial transactions since last June.
Fitch said the extent of the credit crunch is similar to that in 1989 in the lead-up to the 1991 recession.
Ngiam Ai Ling, director of Fitch's sovereign ratings team, told analysts Australia would post its worst economic performance since 1991.
"With household demand and private investments constituting about 80 per cent of Australia's GDP it is unlikely that the expansionary fiscal stimulus measures can pick up the slack on domestic economic activity," she said of the government's proposed $42 billion package.
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