Comments from Fitch in their 2016 outlook report for Australian banks

(Or Fiatch, if you prefer).

Main points:

  • Maintains a Stable sector outlook on Australia's banking sector in 2016
  • Expect strengthened capitalisation and recently tightened underwriting standards to offset slower profit growth and modest asset-quality pressure
  • Profit growth likely to slow due to ongoing asset competition, higher funding costs, and a modest increase in loan-impairment charges
  • Australia's household debt is likely to remain high in 2016, making borrowers sensitive to increased unemployment and higher interest rates
  • Expect house-price growth to moderate
  • Economic growth is likely to benefit from stronger household spending, which could either reduce Australia's savings rate or increase household debt
  • Unemployment rate is expected to remain relatively stable in 2016 before modestly improving in 2017
  • Expects Australia's credit cycle to turn in 2016, although any weakening in asset quality should remain manageable
  • Expect banks to continue to strengthen their capital positions

Bolding is mine