... for Australia's banking sector remains stable in 2016. We expect strengthened capitalisation and recently tightened underwriting standards to offset slower profit growth and modest asset-quality pressure. Slowing Profit Growth: Profit growth is likely to slow due to ongoing asset competition, higher funding costs, and an increase in loan-impairment charges. Improvements in cost management are likely to be offset by increased investment in technology. Increasing Macroeconomic Pressure: Australia's household debt is unlikely to decrease in 2016, making borrowers sensitive to changes in interest rates by the banks. House prices remain high relative to peer countries, but we expect their growth to moderate after 18 months of unsustainable increases in some Australian cities. Economic growth is likely to benefit from stronger household spending, which could either reduce Australia's saving rate or increase household debt. Asset-Quality Pressure...
