Morgan Stanley flags rising risks for Australian banks, sees de‑rating ahead

Westpac Banking

25/05/2026 03:59

** Morgan Stanley takes a cautious view on Australian banks, warning operating conditions are shifting sharply after a supportive 2025 backdrop

** ASX/200 financials sub-index .AXFJ trades little changed, last up 0.1%

** Brokerage says rising rates, fiscal changes and a global energy shock are increasing downside risks to economic growth

** Notes May reporting season was underwhelming, with weaker-than-expected margin trends and softer capital positions at some lenders

** Warns slower loan growth and rising credit losses could drive further earnings downgrades, after cutting estimates by ~4% since March

** Sees Westpac WBC.AX and NAB NAB.AX as most vulnerable given fundamentals and investor positioning

** AXFJ flat this year, including the day's move

 (Reporting by Roushni Nair in Bengaluru)

 ((Roushni.nair@thomsonreuters.com))