Australians with stocks in banks may need to rethink their finances, says leading analyst

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Australians have more money invested in bank stocks than any other stocks, either directly or indirectly, but a leading bank analyst says the economy is on a dangerous slope and so are the banks.

He is worried the worst for the banks is yet to come, starting from October with the withdrawal of billions of dollars of government stimulus.

"You wouldn't call it a fiscal cliff anymore but certainly looks to be a very challenging environment, so we won't know how bad things are until sometime after September," Mr Johnson told the program."As long as you have got earnings expectations declining, the risk of no dividend, all of these economic risks, it wouldn't surprise me if you saw them track back down to the lows that they were [in March].

"Net interest margins are falling because of very strong levels of competition on interest rates. Customers moving from credit cards to debit means fees fall. Another drag on the bank's bottom lines is provisioning, or how much cash they have to put aside for loans going bad, and Mr Johnson is one of many analysts worried not enough has been put aside so far.

 

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