RBA’s FSR: Australian financial system resilient, risks contained

In its semi-annual Financial Stability Review (FSR) published on Thursday, the Reserve Bank of Australia (RBA) said that “the  Australian financial system resilient, risks contained.”

Additional takeaways

• Risks include stress in china's financial sector, lack of significant response from Beijing.

• Low global risk premia, high leverage increase danger of disorderly downturn in global asset prices.

• Financial system vulnerable to digitalisatiion, concentration of ai/cloud providers.

• Growth of superannuation to one quarter of financial system could amplify shocks.

• Risk of widespread financial stress in australia remains limited.

• Small but rising share of australia home borrowers falling behind on payments.

• Only around 2% of all owner-occupier borrowers in real danger of defaulting.

• Less than 1% of owner-occupier loans more than 90 days in arrears.

• Around 0.5% of home loans in arrears estimated to be in negative equity.

• Vast majority of borrowers expected to be able to continue servicing debt.

• Sees risk households could take on excessive debt once interest rates fall.

• Australian banks well capitalised, profitable and have low exposure to bad debt.

• Strengthening operation resilience of banks a priority for regulators.

Market reaction

AUD/USD was last seen trading 0.18% higher at 0.6835, underpinned by the encouraging FSR report.