Banking giants drag financial sector down

It brings the ASX200 to a four-week low

Banking giants drag financial sector down

Losses for Australia’s big four banks accounted for 38 points of the ASX200’s 101.4-point slide to a nearly four-week low of 7019.7, dragging the financial sector down by 2.2%.

The CBA fell 2.6% to a three-month low of $94.95. Westpac faced a 3.7% drop, bringing it to a three-month low of $21.17. NAB fell 2.3% to its own three-month low of $28.25, while ANZ dropped 2.3% to its lowest in one and a half years - $23.35.

Read more: Bank share prices take dip following RBA’s rate rise

Non-bank mortgage lender shares also dropped in price. Genworth Mortgage fell by a steep 8.3%, Pepper Money by 6.5%, and MyState by 4.2%.

The financial sector is currently down 7.6% this week, putting it on track for the worst week since the onset of COVID-19 in March 2020, with the RBA’s shocking 0.5% rate hike on Tuesday threatening profit margins.

Read next: RBA announces hefty rate hike

City Index analyst Tony Sycamore said that while higher interest rates were good for banks in moderation, there was ongoing concern about bad debts, a property market quickly losing steam, and diminishing mortgage books that comprised the bulk of their assets.

“If interest rates go too high, and people start losing their jobs, that becomes a credit impairment issue,” he told AAP. “What are the bad debts going to look like? And what do the assets sitting on their books look like? If property goes down 20%, that’s a material hit to the banking sector’s asset base.”