RBA Financial Stability Review: Financiial system in good shape

The Reserve Bank of Australia Financial Stability Review is out, noting that the financiial system in good shape.

Headlines

Financial system in good shape, bank resilience has increased significantly

Important banks do not increase risk taking, weaken lending standards or culture

Overall household resilience remains sound, supported by jobs growth and low rates

Tighter regulations have moderated housing market, seen large fall in high lvr loans

Financial risks have shifted from housing to residential development, commercial, resource sectors

Risks growing for apartment projects should Asian demand wane, esp in Melbourne and Brisbane

Investor demand from china, Asia pushing up commercial prices sharply, compressing yields

Foreign investors accounted for a record 40 pct of commercial purchases in 2015

Commercial property stress concentrated in Perth & Brisbane, Melbourne & Sydney much stronger

Business finances generally in good shape, but signs of stress in resources sector

Financial health of resources sector has deteriorated significantly over past 6 months

Australian bank exposure to resource sector is small, but some Asian banks vulnerable

Risks more prominent in Australia bank exposure to new Zealand housing, dairy sectors