Reserve Bank warns of looming global threats to Australian economy

Assistant governor nominates household debt levels and bank exposure to shifts in risk sentiment...

The fallout from the banking royal commission may hurt bank profits, and rising trade tensions could spark a sharp global downturn that puts Australia’s highly indebted households at risk, the Reserve Bank has warned.

Michele Bullock, an RBA assistant governor, has told an audience at the Commonwealth Bank global markets conference in Sydney that the banking royal commission had only had a small direct financial impact on Australia’s banks, given the fines to date had been “relatively small” compared with the sector’s annual profits of $30bn.

However, the ability of the banks to keep generating such large profits may be undermined by the prospect of class actions and rising compliance costs following the hearings, she said.

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https://www.theguardian.com/australia-news/2018/oct/30/australian-economy-at-risk-from-hit-to-bank-profits-and-global-downturn