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Market Chatter: Australian Banks' May Reporting Season 'Underwhelming,' Operating Conditions Shifting Rapidly, Morgan Stanley Says

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Australian banks' reporting season in May was "underwhelming" and they faced a rapid and material shift in operating conditions, according to Morgan Stanley analysts Richard Wiles and Sally Hong, the Australian Financial Review reported Wednesday.

Morgan Stanley downgraded fiscal 2027 cash earnings-per-share estimates by 4% since March as revenue growth slows, credit demand weakens, and loan losses gradually rise, reversing an upgrade in February.

Three hikes in the official cash rate, proposed changes to property-related tax measures in Australia's federal budget, as well as the impact of the global energy shock all contribute to the uncertainty in outlook for banks, per Morgan Stanley.

The investment firm preferred ANZ Group Holdings (ASX:ANZ, NZE:ANZ) over Westpac Banking (ASX:WBC, NZE:WBC), National Australia Bank (ASX:NAB), and Commonwealth Bank of Australia (ASX:CBA).

(Market Chatter news is derived from conversations with market professionals globally. This information is believed to be from reliable sources but may include rumor and speculation. Accuracy is not guaranteed.)

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