Reserve Bank of Australia Financial Stability Review, September 2024.
Headlines via Reuters:
- The Australian financial system is resilient and risks are limited.
- Risks include pressures on China’s financial sector and the lack of a significant response from Beijing.
- Lower global risk premiums and higher leverage would increase the risk of a disorderly slowdown in global asset prices.
- The financial system is vulnerable to digitization and the concentration of AI/cloud service providers.
- The growth of pensions to a quarter of the financial system could amplify shocks.
- The risk of widespread financial stress in Australia remains limited.
- A small but growing proportion of Australian borrowers are falling behind on their loan payments.
- Only about 2% of all homeowner borrowers are at risk of default.
- Less than 1% of homeowners’ loans are more than 90 days delinquent.
- It is estimated that about 0.5% of delinquent home loans are negative equity.
- The vast majority of borrowers are expected to be able to continue to repay their debts.
- The RBA sees a risk that households will take on excessive debt once interest rates fall.
- Australian banks are well capitalized, profitable, and have low exposure to bad debt.
- Enhancing banks’ operational resilience is a priority for regulators.
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The Financial Stability Report provides the Bank’s assessment of the current state of the financial system and potential risks to financial stability. The report contains a number of boxes on topics of particular interest, as well as occasional articles. The report is issued semi-annually.
This article was written by Eamonn Sheridan on www.forexlive.com.