Moody’s issues bank ratings warning: report

Continued growth in property prices may hurt local banks in long term, ratings agency says.

Ratings agency Moody’s has warned of risks to the local banking sector should property prices continue to mark strong gains over the next year, The Australian reports.

The AA ratings of Australia’s largest banks are not yet in any danger, Moody’s said, but risks to the downside in the property sector would be exacerbated should prices continue to rise.

“Although Australian banks are well positioned to handle immediate threats arising from possible housing market excesses, tail risks are significant,” the report from Moody’s said, according to The Australian.

The ratings agency said that should the price rally persist, the banks “could become credit negative within 12 months”.