Digital Finance Analytics (DFA) Blog
"Intelligent Insight"
APRA has announced the new capital ratios, to meet the‘unquestionably strong’ benchmark. The four major Australian banks will need to have CET1 capital ratios of at least 10.5 per cent by effectively increasing requirements for all IRB banks by the equivalent of around 150 basis points. For other ADIs, the effective increase in capital requirements … Continue reading “APRA Imposes Higher Capital Requirements”
Wayne Byres speech “Fortis Fortuna Adiuvat: Fortune Favours the strong”, as Chairman of APRA, at the AFR Banking & Wealth Summit, makes two significant points. First, there are elevated risks in the residential lending sector (even after the recent tactical announcements on interest only loans). Banks remain highly leveraged businesses. Second, despite the delays from … Continue reading “APRA Looking At Capital Ratios For Mortgages”
APRA released a brief update to support their zero Countercylical Capital Buffer setting. As they say “the countercyclical capital buffer is designed to be used to raise banking sector capital requirements in periods where excess credit growth is judged to be associated with the build-up of systemic risk. This additional buffer can then be reduced … Continue reading “APRA On The Countercyclical Capital Buffer”
Wayne Byres APRA Chairman spoke at Finsia’s ‘The Regulators’ event, Melbourne. He discussed risk culture, profitability and returns in the financial system, and Basel risk capital. We focus on the capital discussion, because he warned that the IRB banks are re-calibrating their models to get closer to the 25% risk weighting. As a result there … Continue reading “APRA Re-Calibrates IRB Bank Capital”
In a speech by APRA Chairman Wayne Byres, “Finding success in failure” delivered in Sydney today at the Actuaries Institute conference, ‘Banking on Capital’, he discusses capital standards for authorised deposit-taking institutions (ADI’s) and why a sole reliance on capital to deliver financial stability is an unwise strategy: ‘When we judge a bank’s capital to … Continue reading “Capital Is Not Enough – APRA”
APRA has issued an update on Australian Bank capital ratios. They show that banks in Australia have lifted their capital base in the past year, (e.g. CET1 from 11.7% to 13.5% on an international comparison basis at December 2015), but APRA also underscores the fact that even higher capital ratios will be required to meet … Continue reading “International capital comparison update – APRA”
The Business covered the recent APRA announcements and their impact on the mortgage market and the banks who use the internal ratings. The segment includes comments from DFA.
APRA has announced that capital risk weight for banks using the internal risk-based model will increase from 16% to at least 25% from 1 July 2016. These changes, which chime with the recommendations from the FSI, will apply mainly to the big four and Macquarie and will tilt the playing field slightly back towards a … Continue reading “APRA Increases IRB Capital Adequacy Requirements for Residential Mortgages”
APRA released their comparative capital study today. Overall, whilst it shows that on an international comparison basis Australian banks are well placed, they are not placed in the top quartile of their international peers, so confirms the observation made by the FSI Inquiry. For the purpose of this analysis, APRA has used the 75th percentile … Continue reading “APRA Confirms Banks Will Need More Capital To Achieve FSI Recommendations”
APRA’s Wayne Byres today spoke at the COBA CEO & Director Forum in Sydney. His speech was entitled ‘Sound lending standards and adequate capital: preconditions for long-term success’. He highlights some interesting behaviourial differences between banks when it comes to the appraisal of mortgage loans, and also talks (and reinforces APRA’s position) with regards to … Continue reading “APRA On Lending Standards And Capital”