Australia is the only country to have its banking sector receive a ‘very cautious’ rating by UBS analysts.
In UBS’ recently released Global Banks: How could a trade war impact banks? report, overall sentiment towards the global banking sector was “positive albeit marginally less” so, dropping to 50 per cent positive on the sector from 53 per cent from the Q3 2018 survey.
However, when broken down by region, UBS’ sentiment towards Australia had markedly deteriorated.
“In Australia … we are now very cautious after being slightly cautious in the previous survey, as the risk of a credit crunch is rising,” the report said.
“We remain underweight Australian banks and view risk to be skewed to the downside. The growth outlook is subdued and the rest of 2018 is likely to remain challenging.”
There were several headwinds that were dragging down credit availability, the housing market as well as the banks, the report noted.
UBS has downgraded the major banks’ housing credit growth to 4 per cent in FY2018–19 and no growth in 19–20.
Westpac was featured among the bottom five of UBS’ list of global bank stocks.