“The low lending charges have been offset by a flood of low-cost buyer deposits and entry to the TFF, however that tailwind is working its course,” Nathan Zaia, fairness analyst at Morningstar, instructed S&P World. “All banks pointed in the direction of margins being underneath stress within the subsequent 12 months, particularly if demand for fixed-rate loans stays so excessive.”
When it reported its full-year outcomes final week, Commonwealth Financial institution stated it expects “a variety of headwinds to impression group NIM within the subsequent monetary yr.” CBA cited the continued low-rate surroundings, elevated competitors, clients switching to fixed-rate mortgages and better deposit charges as elements that might impression its web curiosity margin. The financial institution’s NIM fell to 2.03% within the fiscal yr ending June 30, from 2.07% the earlier yr, in accordance with S&P World.
Westpac, which follows a special fiscal calendar, stated in its third-quarter buying and selling replace Tuesday that its NIM within the second fiscal half may very well be decrease than within the first. Westpac earlier reported that NIM within the first half, which ended March 31, was 2.06%, down from 2.21% the prior yr. Westpac’s earnings nonetheless rose due to the TFF assist regardless of the autumn in margins, S&P World reported.
Learn subsequent: ANZ scrambles to reverse home-lending slide
The banks nonetheless boast robust steadiness sheets. CBA plans to purchase again as much as $6 billion in shares. ANZ and NAB have supplied to purchase again $1.5 billion and $2.5 billion in shares, respectively. Westpac stated it could contemplate a return of capital, with an replace at its full-year outcomes, S&P World reported.