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July 16 (The following statement was released by the rating agency)
Fitch states in its APAC Chart of the Month report that Australian bank funding and liquidity improvements are likely to continue, albeit at a reduced pace. However, a sharp increase in demand for credit may pressure the ability of banks to fund the growth without potentially reversing some of the recent gains.
Banks have largely addressed the capital and liquidity coverage ratio requirements of Basel III following significant strengthening post-2008. An increase in deposit gathering and lengthening of wholesale funding duration drove stable funding (customer deposits + long-term wholesale funding) to 75% of total funding at end-March 2014, up from 62% in 2008.
Further funding improvements are likely to be more nuanced, with a greater emphasis on longer-term funding rather than deposits, while any additional capital requirements are likely to be achieved through retained earnings.
Link to Fitch Ratings' Report: APAC Banks: Chart of the Month - July 2014