The outlook for Australia and New Zealand's banking system is negative because of the slowing of the global and local economies, a ratings agency says.
But Moody's Investors Service also says the banking systems in both countries remained robust, with Australia's one of the world's strongest, having escaped most financial crisis related losses.
New Zealand's system also remained sound, despite the economic slowdown, Moody's said in a statement today about its Asian banking system outlook.
"The slowdowns are clearly making themselves felt on the performances of banks in Australia and New Zealand, but the systems in both countries remain very sound," Moody's Asia Pacific managing director for the financial institutions group Jerry Chien said.
Australian banks are facing rising credit costs and contracting loan volumes and the performance of the country's businesses, rather than households, is likely to determine their future performance, Moody's says.
New Zealand's dairy sector is showing stress because of lower milk prices and high levels of debt, which may hurt the asset quality of the banks there.
Moody's said it saw challenges for Asia's banks as a whole because of the severe and protracted global recession.
AAP
