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Falling bank share prices ‘significant’, says RBA

The Reserve Bank of Australia has commented on the recent volatility of local bank stocks in its latest monetary policy meeting.

The minutes of the RBA’s March meeting note that “share prices of banks in the advanced economies, including Australia, had fallen significantly since early January”.

“The declines had been largest in Europe and Japan.

“Globally, there had been concerns about the effect of the prevailing low or negative interest rates on interest margins and yields on banks' high-quality liquid asset holdings and, ultimately, on bank profits and business models,” the RBA said.

“These concerns had been compounded in the euro area by specific issues in particular countries as well as uncertainty about the operation of the new European bank resolution regime.”

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In Australia, news of increased bad and doubtful debts at ANZ and Westpac saw the banks’ share prices fall further on Tuesday.

ANZ announced an increase of $100 million to its bad and doubtful debts on Thursday, bringing its total expected credit charge for the first half of 2016 to $900 million.

Westpac said it could increase debt provisioning in its institutional business, adding that it is beginning to see consumer loan stress, predominantly in the mining states of Western Australia and Queensland.

[Related: Major bank sounds alarm on bad debts]

Falling bank share prices ‘significant’, says RBA

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>The minutes of the RBA’s March meeting note that “share prices of banks in the advanced economies, including Australia, had fallen significantly since early January”.

“The declines had been largest in Europe and Japan.

“Globally, there had been concerns about the effect of the prevailing low or negative interest rates on interest margins and yields on banks' high-quality liquid asset holdings and, ultimately, on bank profits and business models,” the RBA said.

“These concerns had been compounded in the euro area by specific issues in particular countries as well as uncertainty about the operation of the new European bank resolution regime.”

In Australia, news of increased bad and doubtful debts at ANZ and Westpac saw the banks’ share prices fall further on Tuesday.

ANZ announced an increase of $100 million to its bad and doubtful debts on Thursday, bringing its total expected credit charge for the first half of 2016 to $900 million.

Westpac said it could increase debt provisioning in its institutional business, adding that it is beginning to see consumer loan stress, predominantly in the mining states of Western Australia and Queensland.

[Related: Major bank sounds alarm on bad debts]

Falling bank share prices ‘significant’, says RBA
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