Australian Banks Fortnightly: Money in the Bank: Issue #26

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Australian Banks Fortnightly: Money in the Bank: Issue #26

Australian Banks Fortnightly UBS Research

Major bank provision scenarios and economic forecasts

Below we present key economic indicator forecasts from the majors alongside their

reported provision scenarios in Figure 3 and 4. The following stand out to us:

Westpac is most conservative on GDP growth, inflation and unemployment in

2026/27. NAB is most positive on inflation and 2027 GDP growth.

ANZ's severe downside scenario would see a large impairment charge (~$5B) to

bridge its 1H26 reported provisions to this scenario, the largest difference out of

the majors. ANZ didn’t increase its CP overlay in its 1H26 results (here) as peers did.

This saw a +2.7% Cash NPAT beat, but arguably of lower quality.

ANZ's earnings are likely most at risk to downside shocks in a deteriorating credit

environment, arguably more than NAB. Since the conflict with Iran, starting 28 Feb

2026, ANZ's share price has fallen -11% compared to NAB's -20%, which we

believe has traded down primarily on asset quality concerns (ASX200 -5%).

Figure 3: Majors' central vs downside scenario provisions Figure 4: Majors' provision scenarios compared to their

FY26E CRWAs (bps)

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al dow s) n s

vs sio cen

nsi As (bp

sce nar os com par

CRW s io 6E ari de rs ce pr ors ir FY2 jo ion ntr

Maj Ma

vis o the

pro ed t

Source: Visible Alpha, Company reports, UBS. Note: Central and downside Source: Visible Alpha, Company reports, UBS. Note: Central and downside

scenarios are companies' estimates reported in their financial presentations. scenarios are companies' estimates reported in their financial presentations.

Figure 5: 2026 Economic Input Forecasts Figure 6: 2027 Economic Input Forecasts

nomi

Fore

nomi Fore

c In cast 2026 Eco put s c In cast

2027 Eco put s