In 2022, global banks faced the headwinds of a lingering pandemic, an ongoing large scale ground war in eastern Europe, economies and businesses facing supply chain disruptions, a return of inflation levels unseen for decades in most developed nations, and the structural jolt of rising interest rates and quantitative tightening by major central banks globally. In a deliberate shock to the Australian economy and banking sector, 2022 saw an aggregate rise in the RBAs target cash rate of 3% over 8 consecutive monthly rate decisions from May to December.

We have since this tightening (with more in 2023) seen a significant banking crisis morph into a major market issue. Will the banking crisis become a solvency crisis in 2023? A key theme this year is regions and banks responses to these conditions, and adjustments made in exposure to Australia as operations and risk exposures are reviewed.

To produce the FBT, we drew on the Australian Prudential Regulation Authority (APRA) monthly banking statistics, focusing on the reporting of banks total residents assets. The report continues to reveal interesting patterns of capital investing into Australia. Indeed, this latest edition shows a continued expansion of foreign banks in our domestic marketplace. The key inferences which we have drawn from the publication include exploring trends including:

• showing how the Infrastructure pipeline is attracting new entrants
• continued Asian Bank outperformance
• the sharp North American countertrend
• how European banks with domestic subsidiaries dominate and
• how Credit Agricole is following a well-worn path.