2017.06.2001:55:00UTC+00Australian Bank shares Sink after Moody’s Downgrade

Shares of Australia's “Big Four” lenders traded weaker after Moody's Investors Services lowered its credit rating and a few other domestic banks, citing the heightened risks posed by the household sector.

Australia & New Zealand Banking Group Ltd. Banking Group fell 0.5 percent, Westpac Banking Corp. slid 0.3 percent, Commonwealth Bank of Australia declined 0.3 percent and National Australia Bank weakened by 0.5 percent.

According to the ratings agency, the downgrade was prompted by the heightened risks in the household sector that increase the sensitivity of Australian lenders' credit profiles to an adverse jolt. The cut also comes despite the enhancement of the Australian banking sector's capital and liquidity in the past years.

Moody's added that the strength of household balance sheets and relatively bank portfolios to a significant economic downturn has not yet been tested at the current levels of private sector indebtedness.