Aussie banks in good shape
Australia’s four major banks remain in good shape as the economy emerges from the worst of the global financial crisis, according to the latest research released by Fitch Ratings.
The Fitch Ratings semi-annual review of the major banks noted, however, that funding remained a key challenge.
“Despite some deterioration, Australian bank asset quality remains sound and is one of the main reasons why the major Australian banks have retained access to wholesale funding markets during the crisis,’ Fitch Ratings Financial Institutions Group director, Tim Roche.
“Nevertheless due to their reliance on offshore wholesale funding, they remain vulnerable to future disruptions,” he said.
Roche noted that Australia had been less impacted by the financial crisis due to its proximity and ties to Asia, the strength of the local banking system and monetary and fiscal stimulus.
While this has helped preserved their financial integrity, Australian banks have also taken the opportunity to bolster their liquidity and capital positions and improve their funding profile through an increased focus on deposit gathering, reducing reliance on short-term wholesale funding and lengthening the average term to maturity in the wholesale funding portfolio.
The Fitch analysis noted a rise in impaired asset levels over the past two years from a very low base, but said the rate of formation of new impaired assets had shown signs of moderating through the first half of 2010.
AUTHOR
Mike Taylor
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