Overview

• The review cites stretched asset valuations, cyber and operational exposures, and prolonged weakness in China’s property and financial system as the main external threats.
• It judges banks well capitalised and most borrowers meeting repayments, and backs APRA’s plan to keep the 3 percentage point mortgage serviceability buffer.
• The RBA warns that leverage in hedge funds, liquidity mismatches in bond funds, heavy concentration in top US equities, and super funds’ bank‑bill holdings could magnify a sell‑off.
• Growing reliance on common technology providers raises the chance that outages or cyber attacks could trigger systemic disruption, referencing recent incidents such as the ASX settlement outage and the 2024 CrowdStrike episode.
• The bank notes spillover risks through trade and market sentiment, with developments like the US tilt to short‑term debt issuance and the current government shutdown illustrating a fragile backdrop.