Australian banks fall as Morgan Stanley flags further earnings downgrades

Commonwealth Bank of Australia

10/09/2026 02:00

** Australian banks .AXFJ slip as much as 1.5% to hit  their lowest level since June 12
** Sub-index down for a third day, "Big Four" banks slip between 1.5% and 2.5% 
** Morgan Stanley projects a cautious industry view given expectations that the slowing economy and higher rates will lead to further EPS downgrades and ongoing trading multiple de-rating 
** Brokerage has lowered its FY27 EPS estimates for major banks by average of ~7% since start of May
** Demand for new mortgages is weak, but the post-Budget decline in applications is being mitigated by refinancing activity - Morgan Stanley 
** Morgan Stanley notes increasing mortgage competition, rising term deposit rates, while deposit mix shift remains a margin headwind
** Sub-index down 3.3% YTD

 (Reporting by Sneha Kumar in Bengaluru)
 ((Sneha.Kumar@thomsonreuters.com;))