25/05/2026
Australia’s banking system passes a tough stress test.
Australia has just passed one of the toughest banking stress tests in the world.
In its May 2026 System Risk Outlook, Australian Prudential Regulation Authority confirmed the banking system could withstand a deep global recession, higher funding costs and major operational disruptions all at once.
Banks remain well capitalised, liquidity is strong and the system is built to keep lending even if conditions worsen.
That said, APRA warned risks are rising, particularly around geopolitical instability, cyber threats, artificial intelligence and increasing competition between lenders.
Housing also remains a key focus, with elevated property prices and high household debt still creating vulnerabilities. APRA noted some lenders are making exceptions outside normal lending standards as competition intensifies, and said further macroprudential tools remain available if risks continue to rise.
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