Corporate lending tilt to drive up capital strain for Australian banks, says Jarden

Commonwealth Bank of Australia

15/06/2026 22:41

** Jarden sees major Australian banks facing increasing capital strain, driven by a shift toward corporate lending, greater sensitivity to economic downturns and interest rate risks
** The Labor government said in May it would restrict negative gearing, — which allows investors to offset property losses against taxable income — to newly built homes, a move that threatens to slow investor housing credit growth
** A sustained shift toward corporate lending will increase capital requirements as these loans carry a higher risk weightage than housing loans, Jarden says
** Banks may have over-optimized during a period of very benign credit environment; risks can rise if the credit cycle turns, the investment bank adds
** "There is no free lunch from increasing the hedge on free deposits and equity when interest rates rise and remain elevated" - Jarden
** Despite recent re-rating, Jarden says major banks remain expensive at around 18 times earnings and not priced for any negative regime change

 (Reporting by Shruti Agarwal in Bengaluru)
 ((Shruti.Agarwal@thomsonreuters.com))