Reserve Bank of Australia Financial Stability Review
- financial system resilient, banks well capitalised and profitable
- bank capital ratios close to or above "unquestionably strong" targets
- overall funding costs for banks has declined over the past year
- risks to bank capital from past misconduct "appear limited" so far
- high household debt, riskier lending of recent years remain macro-financial risk
- risks have abated somewhat due to prudential measures, tighter loan standards
- small minority of borrowers with interest only loans to face difficulty with refinancing
- most indicators of household financial stress remain fairly low
- around A$480 bln of interest only loans to expire between 2018 and 2021, 30 pct of mortgage credit
- step-up in mortgage payments on these loans could be between 30-40 pct
- but several factors suggest any increase in financial stress will not be widespread
- commercial property still hot in Sydney and Melbourne, some banks concerned at low yields
- potential risks from large apartment pipeline have not materialised as yet
- Asian banks account for 12 pct of total business credit, has doubled since 2012
- Australian households coping with financial stress, but bears watching
(those quick headlines are via Reuters, bolding mine )
Full text is here: Financial Stability Review
Bloomberg have a slightly different take with their set of headlines, just a little more wary:
- Detrimental shock could lead to lasting correction in mkts
- Australian fin. system resilience has been strengthened
- Some interest-only borrowers seeing repayment difficulty
- Conditions in commercial property remain an area to watch
- Global mkts pricing in little chance of adverse outcomes
- Risks to Australia from Chinese economy remain elevated
This review is a twice-yearly publication from the RBA
For background, preview is here
My take is this is a balanced report (as usual) from the RBA. yes, there are risks. yes, there is also good news.
Carry on.
