June 14 (Reuters) - Moody’s Investors Service on Thursday said the ongoing Royal Commission into Australia’s financial sector had potential profit implications, but bank credit profiles would continue to be supported by the sector’s concentrated structure.
Banks, mainly the “Big Four” - Commonwealth Bank of Australia, Westpac Banking Corp, Australia and New Zealand Banking Group and National Australia Bank , have had their mortgage practices and portfolios subjected to intense scrutiny under the commission. Tighter mortgage underwriting could slow down credit growth, and pose a risk to the banks’ future profitability, Moody’s said.
Any penalties imposed in the wake of the commission would be manageable for the banks, given their strong profitability to date, the ratings agency added.
A Royal Commission is Australia’s most powerful type of government inquiry, particularly because it has the power to compel witnesses. A Royal Commission ranks above the courts and even, once the government has appointed it, the government itself. It covers a broad range of subjects deemed to be in the public interest, from individual matters to broad industry examinations. (Reporting by Ambar Warrick in Bengaluru, Editing by Sherry Jacob-Phillips)