As the February 2025 earnings season progresses, Australian banks are under scrutiny amid concerns of a potential sell-off. Analysts are closely examining the forthcoming financial results, particularly in light of rising interest rates and ongoing global economic challenges. The Commonwealth Bank of Australia (CBA) is scheduled to release its interim earnings on 12 February 2025, providing insight into the sector’s resilience.
Higher interest rates have a dual impact on banking institutions. While they can bolster net interest income, there is an associated risk of increased loan defaults, especially within the residential property sector. Analysts have expressed concerns that the elevated valuations of banks like CBA may not be sustainable amid rising macroeconomic challenges.
Economic indicators present a mixed outlook. Australia’s Gross Domestic Product (GDP) grew by 0.3% in the third quarter of 2024, reflecting modest economic expansion. Inflation is moderating and is anticipated to return to the target range of 2–3% in 2025.
