The Australia and New Zealand Banking Group (ASX: ANZ) share price was out of form on Friday.
The banking giant's shares fell almost 5% to a multi-year low of $22.13.
Why did the ANZ share price sink lower on Friday?
It wasn't just ANZ that fell heavily, all the big four banks dropped notably lower.
The Commonwealth Bank of Australia (ASX: CBA) share price fell over 3.5% to $73.93, the National Australia Bank Ltd (ASX: NAB) share price dropped 5.5% lower to $22.00, and the Westpac Banking Corp (ASX: WBC) share price sank 4% lower to $21.35.
ANZ and the rest of the big four were sold off amid concerns that they could soon experience a surge in bad and doubtful debts.
This follows the release of a broker note out of Credit Suisse this morning.
According to the note, the broker downgraded its earnings estimates for the banks after factoring in both the cash rate cuts and its belief that economic stress could lead to increasing bad debt provisions.
In respect to the latter, the broker is concerned that the coronavirus outbreak could impact small businesses linked to the supply chain in both the tourism and education markets. This could lead to narrower margins and ultimately dividend cuts.
Credit Suisse isn't the only broker that has concerns about the banks. Earlier this week UBS retained its sell rating and trimmed its price target on Commonwealth Bank's shares to $71.00.
It made the move after reducing its earnings estimates on the belief that Commonwealth Bank's net interest margins is going to come under pressure due to the Reserve Bank's cash rate cut this month and its expectation of another cut in April.
The broker also warned investors that while the banks look cheap now, it fears this may be the new normal for the sector.
