Not sure if anyone read todays article in the AFR re an independent study conducted by a fund that provides data for the future fund itself- highly reputable, highlighting the state of the big 4s mortgage books.
We officially have an interest only loan sub prime equivalent, and WBC is leading the way with 50% of its mortgage book interest only... pretty appalling really, APRA should be seriously asskicked for this, as should top bank execs.
Whats worse, a high majority of these stupidly high exposure loans are at like 8x+ salary to loan ratios... 5-8 years ago, 3-4x was the higher end of normal.
It highlights there are like $100bn in default ready loans, and the banks could lose nearly $30bn in a moderate downturn, or wipe out half their balance sheets in a more severe downturn.
Looks like WBC and CBA have double the exposure to mortgage portfolios than ANZ or NAB, and far higher exposure to interest only too.
Must say, bank shareholders should be mighty pissed at this kind of finding... its literally a repeat of the US banks circa 2008.
WBC Price at posting:
$31.19 Sentiment: Sell Disclosure: Not Held
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