By: Staff Reporter
Australian banks continue to perform well in comparison to their international counterparts with strong asset quality contributing to their solid position, a new report has found.
According to Fitch Ratings’ semi-annual review and outlook for major Australian banks, Australia’s proximity and ties with Asia, the strength of the local banking system and effective monetary and fiscal stimulus, have all contributed to an overall lesser impact than in other developed countries.
“Nevertheless, due to their reliance on offshore wholesale funding they remain vulnerable to future disruptions in global markets,” Tim Roche, director of Fitch’s financial institutions group said.
The banks may need to further fortify their balance sheets, the review commented, although they did appear to be in a reasonable position to do so.
According to the review proposals put forward relating to liquidity could place downward pressure on bank profitability and availability of credit; however, a reasonably long time frame for implementation may help ease some of these transition risks.