The Reserve Bank is cautioning the big banks against expanding into Asia too quickly, as the industry looks to capitalise on the enormous wealth being created in the region.
After a fourfold increase in Australian banks' exposure to Asia since 2009, to $112 billion, the central bank said on Wednesday that it expected the trend to continue in the long term as banks looked for new sources of growth.
It said the push into Asia, which has been led by ANZ, could help to expand the big banks' profits, which could benefit Australia's financial system as a whole.
But it added that "moving into any new market poses a range of risks that banks need to manage carefully".
"These risks would probably be heightened if expansion were overly rapid and not backed by a deliberate and well-founded strategy," it said.
The big banks have a mixed record in overseas expansion.
NAB chief executive Cameron Clyne this month said local banks had "mostly destroyed shareholder value by going overseas" - and NAB's business was still being weighed down by its push into Britain.
While ANZ and Commonwealth Bank are bulking up their presence in Asia, Westpac and NAB have opted for a more gradual approach.
The Reserve made the comments in its Financial Stability Review, which said it was not yet clear if the improvement in global markets marked the start of an economic recovery.