Dec 01, 2025 (The Australian - ABIX via COMTEX) --
Looming rises in interest rates next year will not only hit many mortgage holders but will also have a profound impact on the ASX and bank shares. For the first time since the late 1980s, Australia is entering a rising interest rates era in a period where there is a clear weakness in parts of the banking sector. It is not a solvency weakness but, in housing and business banking, many banks are not earning at a sufficient level to match their cost of capital. Analysts following global bank fundamentals are pricing banks on the expectation that artificial intelligence will substantially reduce the costs of banking. However, it will not be easy for AI to substantially change the Australian bank cost structure, and will require another year or two. There is little doubt that among the smaller banks that are not meeting their cost of capital, the higher interest rate environment will cause them to become takeover targets..
Publication Date: 2 December 2025
COMTEX_470723801/2229/2025-12-01T18:10:52
By Robert Gottliebsen
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