Reserve Bank of Australia Financial Stability Review, September 2024.
Headlines via Reuters:
The Australian financial system is resilient, and risks are contained.Risks include stress in China’s financial sector and a lack of significant response from Beijing.Low global risk premia and high leverage increase the danger of a disorderly downturn in global asset prices.The financial system is vulnerable to digitalisation and the concentration of AI/cloud providers.The growth of superannuation to one quarter of the financial system could amplify shocks.The risk of widespread financial stress in Australia remains limited.A small but rising share of Australian home borrowers are falling behind on payments.Only around 2% of all owner-occupier borrowers are in real danger of defaulting.Less than 1% of owner-occupier loans are more than 90 days in arrears.Around 0.5% of home loans in arrears are estimated to be in negative equity.The vast majority of borrowers are expected to be able to continue servicing their debt.The RBA sees a risk that households could take on excessive debt once interest rates fall.Australian banks are well-capitalized, profitable, and have low exposure to bad debt.Strengthening the operational resilience of banks is a priority for regulators.
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The Financial Stability Review provides the Bank’s assessment of the current condition of the financial system and potential risks to financial stability. It contains a number of boxes on topics of special interest, along with occasional articles. The Review is issued half-yearly.
This article was written by Eamonn Sheridan at www.forexlive.com.
