Banks well-placed to manage energy transition risks: Macquarie
Make us a preferred source
Make us a preferred source on Google
The news: Macquarie expects the energy transition will have a "generally neutral" effect on Australian banks' earnings, and flagged that structural headwinds could be offset by growth opportunities in the sector.
The numbers: Macquarie estimated that the energy transition will have a "broadly neutral outcome" to banks' earnings, but may see "a minor earnings headwind" by 2030 of up to around 5%.
Meanwhile, analysts estimated that climate-related credit risk could equate to a structural 2% drag on group NPAT for the major banks by 2030.
The context: Macquarie said the growth opportunities included scope for lending balances to increase as lending shifted from high-emission to sustainable sectors, and operating expense reductions as banks decarbonised their operations.
But the scale of investment required suggests that major banks must be sizeable contributors, they noted.
Macquarie sees key risks including clients not adapting, regulatory side effects, and greater-than-anticipated climate change impacts on collateral values.
Analysts also outlined two broad sources of credit risk from climate change, comprising physical damage to property collateral in the housing loan book and commercial loan losses from transition risk.
The source: Macquarie research
