Australia's financial index hits near 2-year low as banks continue to face inquiry headwinds

[BENGALURU] Australia's financial index hits near 2-year low as banks continue to face inquiry headwinds.

Australia's financial index fell as much as 2.3 per cent, its lowest level since Nov 9, 2016.

The country's financial sector has been hit by damaging revelations of misconduct stemming from a Royal Commission inquiry.

The "Big Four" - Commonwealth Bank of Australia, Westpac Banking Corp, Australia and New Zealand Banking and National Australia Bank - fell between 2 per cent and 1.6 per cent.

"From a historical point of view, they are paying very good dividends. But the fear is that they might be looking at capping dividends. They haven't announced that yet but if their earnings will be down, they will have to cut dividend," said Dale Raynes, associate director at CPS Capital.

ANZ, which fired over 200 staff for wrongdoing, also said last week it would take a A$711 million (S$696.5 million) hit to FY profit due to higher costs, including compensation for poor banking practice. ANZ shares hit their lowest level in over 2 years.

CBA, which named Alan Docherty as its new CFO following the unexpected departure of Rob Jesudason from the post earlier this year, hits lowest level in over 5 years.

As of last close, the S&P/ASX 200 Financials index down almost 12 per cent this year, compared with a 2.8 per cent fall in the S&P/ASX 200 index.

REUTERS