PERTH: The Australian sharemarket has retreated for a sixth straight session, with banks driving the losses after Westpac became the latest major to post solid yet unspectacular results amid tightening operating environments in the sector.
At the 4.15pm (AEDT) official market close, the benchmark S&P/ASX200 index was down 73.6 points, or 1.4 per cent, to 5165.8, while the broader All Ordinaries fell 67.4 points, or 1.27 per cent, to 5221.2.
IG market analyst Angus Nicholson said despite profits “by-and-large” holding up, investors still had lingering concerns about the big banks.
“Growing bad and doubtful debts, contracting margins and slowing housing growth all cloud the outlook for the banks’ results in FY16, with the heady profits of the past five years looking unlikely to return,” he said.
Westpac delivered a modest 3 per cent lift in full-year cash earnings, buoyed by the strength of its Australian retail and business banking operations, and said the outlook for the economy remains positive. But chief Brian Hartzer also said the sector faced a period of modest credit growth, intense competition and some ongoing regulatory uncertainty.
A KPMG report that while the big four’s combined cash earnings grew 5.4 per cent in fiscal 2015, return on equity fell from15.5 per cent to 15 per cent with the accountancy firm warning the downward trend was likely to continue amid tightening capital level requirements.
Meanwhile, Mr Nicholson said another blue-chip stock, Telstra, had endured a difficult day.
“Investors have not welcomed news that profits are likely to be impacted over the next few years as Telstra invests in fighting off competitors and financing speculative investments in Asia,” he said.
In economic news, the Australian Bureau of Statistics data found the trend rate of building approvals had fallen for a seventh straight month although there had been a better-than-expected jump in September approvals, while Australian Industry Group figures showed a slowing of manufacturing activity in October.
