Australia

Australia's banking system is highly concentrated. Of 89 licensed banks at June 2026, the four majors (Commonwealth Bank, Westpac, National Australia Bank and ANZ) held A$5.13tn of assets, about 73% of the banking total. The remainder comprises 30 other domestic banks, led by Macquarie and regional lenders such as Bendigo and Adelaide Bank and Bank of Queensland, seven foreign-owned subsidiary banks including ING Australia, and 48 foreign bank branches focused on wholesale business. Authorised deposit-taking institutions as a whole held A$7.07tn of assets.

The business model is centred on residential mortgages. Housing loans of A$2.87tn made up about 60% of ADIs' gross loans at June 2026, and residential exposures grew 7.0% year on year to A$2.56tn, with investors taking a rising share of new lending. Deposits of A$4.65tn fund around two-thirds of total assets, supplemented by domestic and offshore wholesale borrowing. Commercial property exposures grew 8.3% over the year to A$501.6bn, and new housing loans funded in the June 2026 quarter rose 6.8% to A$200.5bn.

Profitability and capital are strong by international standards. ADIs earned A$42.5bn after tax in the year to June 2026, up 7.5%, a return on equity of about 10.9%. The aggregate CET1 ratio was 12.5% and the total capital ratio 20.5%, while the liquidity coverage ratio stood at 133% and the net stable funding ratio at 114.5%. Non-performing exposures were about 1.1% of loans and 1.01% of residential mortgages, with mortgage arrears of 30–89 days falling to 0.54%.

The main risks are high household indebtedness in a rising-rate environment, as the Reserve Bank raised the cash rate three times in the first half of 2026 to counter renewed inflation, and the sensitivity of variable-rate borrowers to higher repayments. Supervisory attention has also turned to non-financial risk: in 2026 APRA imposed licence conditions on Bendigo and Adelaide Bank over risk management failings and on ING Australia over misreported liquidity.