Posted July 02, 2018 06:02:08 Australia’s banks are still the most vulnerable sector in the economy, with about $1.5 trillion worth of financial assets sitting in the banks’ balance sheets, according to the latest figures from the Australian National Audit Office.
But it’s not all bad news for the sector, with a growing number of financial services firms raising their expectations for the future.
Key points: The ANAO says there were more than $1 trillion of financial sector assets in the Australian financial system in 2018-19.
The ABS estimates there were $1,066 billion of financial institutions’ assets in 2018‑19.
Banks’ financial assets in 2019-20: ANAo data shows $1bn of financial companies’ assets were in the banking sector in 2019‑20, compared with $1 billion in 2020-21.
The ANS’s figures show there were 1,052 financial institutions with a total of $1 million or more in assets, a rise of 24 per cent on the previous year.
Banks also saw an increase in the amount of assets they hold in their balance sheets from the previous financial year.
Financial services firms are the fastest-growing sector of Australia’s economy, growing at a rate of nearly 9 per cent a year between 2018-2019 and 2019-2020.
That’s up from 3 per cent over the same period in 2020.
Banks have been in a long-running battle with regulators, which has led to a raft of reforms to their structure and oversight.
They’re now required to provide financial statements and report on the financial position of each entity, which they did in 2018.
The ACCC has launched a public inquiry into the regulator’s regulatory oversight of banks.
Banks are also subject to an extensive audit process and the Government’s new financial services legislation has made it tougher for them to fail.
The ANA is not forecasting a large increase in financial services businesses in 2019 and 2020.
However, it expects the financial sector will grow by 7 per cent to $1tn by 2020.
That is down from the 10 per cent growth in 2018 and 2019, but the Government is considering new measures to help stimulate the sector.
Banks continue to struggle with rising costs and growing risks.
In the first quarter of 2019, Australia’s financial services industry lost $1billion in value, according the latest data from the Financial Services and Markets Association (FSMA).
The latest figures also show banks’ cash reserves fell to $3.7tn in the quarter.
“This is a time of stress for financial services in Australia, with the global economy struggling, rising cost pressures, and a number of macro-economic risks,” the FSMA said in a statement.
“The Government is continuing to work with the financial system to address these risks, and to strengthen the resilience of financial markets.”
The ANW has been warning for years that financial services will continue to face increasing pressures in the future as a result of the global economic slowdown and the economic impact of the Australian Government’s tax reforms.
The government has also introduced new measures such as the Medicare rebate for financial assistance and the new superannuation levy.
In a statement, the ANA said: “The ANW believes that the financial industry needs to be well positioned to respond to the global financial situation in a way that will allow them to adapt to and mitigate risks to their financial positions and systems in a manner that is appropriate to the business environment.”
As a result, the government has taken steps to support the financial market in the context of the current global economic climate, including through the introduction of a new super tax and tax incentives, and through the reinstatement of the Reserve Bank’s policy of superannuations for the financial institutions that support them.