(Bloomberg) -- Commonwealth Bank of Australia, the world’s least popular megabank among analysts, has lost its last remaining bull.
The country’s biggest lender, which has the worst consensus rating among banks worth at least $20 billion, now has zero buy-equivalent recommendations after a downgrade by Jefferies Financial Group Inc. The brokerage flagged slowing credit growth and rising cost pressures after the bank warned of a challenging outlook during its full-year earnings results on Wednesday.
“The macro outlook for Australian banks is deteriorating” as rising rates crimp credit expansion, Jefferies analysts led by Brian Johnson wrote in a note. Intense deposit competition is also weakening the company’s net interest margin outlook.
While Australia’s largest lenders have passed on the Reserve Bank’s record series of interest rate hikes since May, they’re yet to show a significant rise in problem loans even after years of extreme mortgage competition. However, sentiment has taken a cautious turn as the nation’s debt-laden consumers grapple with the fastest tightening cycle in a generation.
Commonwealth Bank now has no buy ratings, five hold ratings and 10 sell ratings, according to data compiled by Bloomberg. Australia’s three other major lenders each have at least six buy ratings.
CBA shares closed down 0.2% on Thursday, compared with a 1.1% gain in the benchmark S&P/ASX 200 Index.
The consensus target price implies about 10% decline in the lender’s share price over the next 12 months, versus little change predicted for the S&P/ASX 200 Banks Index, according to Bloomberg data.
(Updates with share moves, additional context from penultimate paragraph)
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