Will regulation hit the banks?

While the big banks have fallen of late as proposed regulation causes jitters in the market, their earnings may be more resilient than you think.

Summary: Australia’s banks are under pressure from potential regulatory changes at the moment. Out of the proposals, using loan to valuation ratios appears to be ruled out, while lifting capital requirements and adjusting the risk weighting attached to investor loans look more likely. But the suggested changes don't necessarily mean loan growth will slow down much when considering the investor-friendly environment of rising house prices and low funding costs.


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