APS 330 disclosures
Basel 3: the journey begins - comparison of APS 330 disclosures.
The Australian major banks have continued to grow their capital ratio over the past year and are generally well positioned to transition to the APRA Basel 3 rules compared to many of their overseas counterparts. However, a number of risks need to be closely managed, particularly: subdued credit growth, change in the economic environment, and higher liquidity and funding costs.
The most recent pillar 3 disclosures show the extent of challenges facing the Australian major banks and the first adjustments to greater scrutiny and tighter regulations.
This publication provides an overview of annual market trends in terms of Risk Weighted Assets (RWA) by risk types and explores key changes in exposure, portfolio quality and capital requirements.
Highlights are:
- Subdued credit growth driven by the mortgage and corporate portfolios.
- Uncertainties around impairment with CBA and NAB having experienced an increase in their corporate impaired assets over the past quarter.
- Additional capital constraints with the application of the Basel 2.5 rules and a regulatory focus on capital.
- Increased exposure towards sovereign lending in anticipation of the future liquidity requirements.
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