Why the banks are set for a profit squeeze

Fitch's prediction of a softening outlook for banks is hardly surprising, but a spike in bad debt charges is unlikely to have a material impact on slower earnings growth.

Fitch Ratings’ assessment of a softening outlook for major bank earnings this year is uncontroversial, although its concerns about higher bad debt charges might be misplaced. There should be other, more material, issues for them to deal with.

The major banks have to some degree defied gravity in recent years, posting solid earnings growth despite modest levels of credit growth.


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