WBC price target $41, page-513

Have been saying for a while that Aussie big 4 Banks are twice as well capitalised than they were at the start of the GFC. It will take more than a virus to shakedown the robust banking system in Australia. Westpac's Balance Sheet is strong and they have capital buffer to deal with the current circumstances. The good thing is that Westpac will emerge as a more stronger bank after all this is behind us.

Heaps of homeowners are 6-12 months ahead on their mortgages. Many others have large surplus balances in their offset and redraw accounts. Those homeowners who took loans with LVR of more than 80% have already for LMI (Lenders Mortgage Insurance). Banks have sand bagged their mortgage books post GFC. They also got natural inherent protection and LVR cushion has improved due to the significant growth in property prices since 2013. Banks will not end up with significant increase in bad debt provisons even if there is a 20% fall in the property market. On top of all that, the Government is stepping up and supporting the banks which is allowing the banks to deal with the downturn. The big four banks have got more than 80% market share of residential mortgages. It is the regional banks, non-bank home loan providers, startup neo banks etc. who are at the risk of shrinking as they do not have the balance sheet strength to match the large Banks and they cannot expand their mortgage books during these times. Big four banks are inundated from calls they are receiving from people who are trying to refinance their mortgages from small lenders to big four Banks.

Standard & Poor's says Aussie banks not in trouble, yet

Ratings agency Standard and Poor’s believes downside risks to property prices are not alarming for Australia’s banks. Yet

"We consider that the fiscal and monetary support announced by the Australian authorities in the past two weeks, in combination with hardship relief measures announced by the banks, should cushion the blow from COVID-19 to property prices, and consequently the banking sector,'' it says.

"We estimate that the Australian banks should be able to absorb increased credit losses due to COVID-19 within their annual earnings."