RBA says Australian banks resilient against global shocks
(26 July 2011 – Australia) The Reserve Bank of Australia (RBA) assistant governor Malcolm Edey said Australian banks have little exposure to sovereign debt in countries with the biggest debt problems and are resilient to any global credit shocks.
Edey told a property conference on Monday that the more cautious attitude to borrowing shown by Australian households and businesses would ultimately be good for financial stability.
'But it will also mean that our lending institutions have to get used to lower rates of expansion than were typical in the pre-crisis years,' said Edey, who heads the central bank's financial system division.
Mr Edey said that domestic banks had largely come through the global financial crisis in good shape. Profits had recovered and while arrears rates had crept up in some areas, 'asset quality generally remains good.'
Domestic banks had also increased their reliance on domestic deposit funding, lengthened the average term of their wholesale funding, and so reduced their reliance on short-term wholesale debt.
'These changes will help to make them more resilient to any disruptive event in international credit markets, should it occur,' said Mr Edey.
'But it will also mean that our lending institutions have to get used to lower rates of expansion than were typical in the pre-crisis years,' said Edey, who heads the central bank's financial system division.
Mr Edey said that domestic banks had largely come through the global financial crisis in good shape. Profits had recovered and while arrears rates had crept up in some areas, 'asset quality generally remains good.'
Domestic banks had also increased their reliance on domestic deposit funding, lengthened the average term of their wholesale funding, and so reduced their reliance on short-term wholesale debt.
'These changes will help to make them more resilient to any disruptive event in international credit markets, should it occur,' said Mr Edey.
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