Australian banks well capitalized to absorb any losses - Moody's

The US-based ratings agency, Moody’s Investors Service published on Thursday, 8th December, their latest report on the Australian banks. In the report Moody's Investors Service says that Australian banks' funding stability is improving.

Moody's said that banks in Australia demonstrated mildly deteriorating asset quality metrics during the six months to 31 September 2016, however, they remain well capitalized to withstand an adverse shocks.

Moody's expects that the banks will continue to build capital as the Australian Prudential Regulatory Authority (APRA) begins to implement the "Basel IV" regulatory proposals and ensures that bank capital ratios are set at "unquestionably strong" levels, as recommended by the Financial System Inquiry in December 2014.

"We expect that asset quality will continue to be supported by low interest rates, but that gradual pressure will be exerted by multiple headwinds," says Maadhavi Ramanayake, a Moody's Associate Analyst. "However, the banks are well capitalized to absorb any losses."

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