RBA says its seeing strress in domestic construction sector and commercial lending

Reserve Bank of Australia Financial Stability Review.

Headlines via Reuters

• Australia not immune to global financial shocks
• But Australian banks well capitalised, profitable and highly liquid
• APRA has stepped up oversight of domestic institutions, considering lessons for regulations
• Global financial stability risks have increased, likely to see tightening of credit
• Regulators will need to tighten rules, protect from "digital" runs on banks
• Financial system also at risk if inflation Inflation Inflation is defined as a quantitative measure of the rate in which the average price level of goods and services in an economy or country increases over a period of time. It is the rise in the general level of prices where a given currency effectively buys less than it did in prior periods.In terms of assessing the strength or currencies, and by extension foreign exchange, inflation or measures of it are extremely influential. Inflation stems from the overall creation of money. This money is m Inflation is defined as a quantitative measure of the rate in which the average price level of goods and services in an economy or country increases over a period of time. It is the rise in the general level of prices where a given currency effectively buys less than it did in prior periods.In terms of assessing the strength or currencies, and by extension foreign exchange, inflation or measures of it are extremely influential. Inflation stems from the overall creation of money. This money is m Read this Term stays high, central banks keep tightening
• Most Australian households, firms well placed to weather higher rates, inflation
• But some already in stress and squeeze on budgets likely to last for some time
• Stress seen in domestic construction sector, commercial lending
• Domestic banks well placed to absorb any increase in non-performing loans
• Lenders provisioning for loan arrears to rise, though from very low levels
• Mortgages in negative equity make up only 1% of total loans
• Keeping watching brief on cyber attacks, climate change, geopolitical stress

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