RBA – risks to Australia economy from China remain elevated

Reserve Bank of Australia Financial Stability Review

• financial system resilient, banks well capitalised and profitable
• bank capital ratios close to or above “unquestionably strong” targets
• overall funding costs for banks has declined over the past year
• risks to bank capital from past misconduct “appear limited” so far
• high household debt, riskier lending of recent years remain macro-financial risk
• risks have abated somewhat due to prudential measures, tighter loan standards
• small minority of borrowers with interest only loans to face difficulty with refinancing
• most indicators of household financial stress remain fairly low
• around A$480 bln of interest only loans to expire between 2018 and 2021, 30 pct of mortgage credit
• step-up in mortgage payments on these loans could be between 30-40 pct
• but several factors suggest any increase in financial stress will not be widespread
• commercial property still hot in Sydney and Melbourne, some banks concerned at low yields
• potential risks from large apartment pipeline have not materialised as yet
• Asian banks account for 12 pct of total business credit, has doubled since 2012
• Australian households coping with financial stress, but bears watching

(those quick headlines are via Reuters, bolding mine ) 

Bloomberg have a slightly different take with their set of headlines, just a little more wary:

My take is this is a balanced report (as usual) from the RBA. yes, there are risks. yes, there is also good news.

Carry on.