RBA said Australia’s financial system faces “increased risks” from the coronavirus pandemic, but it’s “well placed to manage them”. The systems enters the challenging period in a “strong starting position”. “Capital levels are high and the banks’ liquidity position has improved considerably over recent times,” it added. “The Australian banks also enter the downturn with high profitability and very good asset performance.”
While most businesses were in good financial health before the pandemic, “some pockets of vulnerability were evident in the retail trade, food and accommodation services, agricultural and construction sectors.” Increase in business failures and loan arrears are “likely over the coming months”. And, there is “considerable uncertainty” around the trajectory of the economic shock and subsequent recovery
