RECENT TRENDS IN AUSTRALIAN BANKING

Authors

  • KEITH HALL,

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      Financial Stability Department, Reserve Bank of Australia. We should like to thank Chay Fisher in particular, and also Chris Aylmer, Alexandra Baker, Craig Evans, Ingrid Linsley, and Adrian McMahon, for their helpful comments and assistance in preparing this paper.

  • DANIEL VERYARD

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      Financial Stability Department, Reserve Bank of Australia. We should like to thank Chay Fisher in particular, and also Chris Aylmer, Alexandra Baker, Craig Evans, Ingrid Linsley, and Adrian McMahon, for their helpful comments and assistance in preparing this paper.


Abstract

This paper discusses the performance of Australian banks over the past decade, focusing on the forces that have shaped bank strategies and outcomes. The robust Australian economy and associated demand for credit, particularly from the household sector, have been significant drivers of bank success. Intensifying competition in lending and deposits has also played a role, manifesting itself largely as price pressure, but also spurring product innovation and the easing of lending standards. While the combination of these forces has allowed bank balance sheets to grow rapidly, the sector has remained well capitalised and has low levels of non-performing assets.

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