15th April 2009
More positive signs
At La Trobe, we believe that even though times are still tough, it is important to keep an eye out for the positive indicators that Australia is well-placed to cope with the inevitable challenges that lie ahead. Here are 2 more positive signs that should give us confidence about the future.
Aussie banks amongst the world's safest
Australia's banks are amongst the safest in the world. Analysis conducted by US publication Global Finance, which ranks the top 50 safest banks based on their credit ratings, places all four of Australia's major banks in the top 20. At number 11, National Australia Bank was the highest ranked Australian bank, followed by CBA (12), ANZ (15) and Westpac (16). New Zealand's ASB Bank, which is owned by CBA, followed closely, at number 18.
The list was dominated by the European Supra Sovereign and Agency (SSA) sector, with German bank KfW topping the list, ahead of CDC of France, BNG of the Netherlands, Rentenbank of Germany and Rabobank of Netherlands. Only four US banks were placed in the top 50: Wells Fargo (21), US Bancorp (26), BNY Mellon (35) and JPMorgan (47). Canada fared better with five banks placing in the top 50. RBC was the highest placed at 10, followed by TD at 14. The top UK bank was 19th-placed HSBC. Other notables were BNP Paribas (8), Banco Santander (9), Deutsche Bank (30), Société Générale (31), Barclays (45) and UBS (46).
Global Finance has produced the list for 17 years, and bases its rankings on a combination of long term credit ratings (supplied by S&P, Fitch and Moody's) and total assets of the world's 500 largest banks.
Mortgage Arrears – Australia very well placed internationally
Recent interest rate cuts from the Reserve Bank of Australia will help improve serviceability and may improve arrears if unemployment remains contained. As a whole, underlying residential loans continue to perform very well. Arrears are rising but off a very low base and from an international standpoint, Australian collateral is performing very favourably versus offshore peers. Over the third quarter of 2008, the level of arrears from some of our most comparable offshore counterparts showed significant increases. As can be seen in the chart below, Spain, Portugal and the United States were the worst performers with 30+ day arrears increasing significantly to 5.1%, 4.0% and 4.3%% respectively. Italy, Germany and the UK also showed further signs of deterioration pushing up towards the 3% level. Despite the recent slight rise, Australia continues to track favourably, joined at the lower end of the arrears spectrum by the Dutch.
So, while no one can predict the future, the foundations of the Australian financial system are holding and there is reason to be confident about the future.
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Head of Funds Management
t +61 3 8610 2811
Chris Andrews is the Head of Funds Management for the La Trobe Group and has responsibility for the La Trobe Australian Mortgage Fund.
Read full profile here.
La Trobe is one of Australia's leading independent specialist mortgage Financiers. Its business includes residential mortgages, commercial mortgages, and investment services operating one of Australia's largest Mortgage Funds under AFSL 222213. It employs over 115 staff and has raised over AUD$10Billion to assist over 100,000 customers since inception in 1952.
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