Are concerns over Australia's banking sector overstated?

Investors have become concerned about the Australian banks in the last year, with the sector down 25% since its peak in March 2016. This is a significant sector, comprising 7% of Asia's total market capitalisation, and is systemically important to the Australian economy.

The collapse in commodity prices has raised fears of deteriorating asset quality in Australian corporate lending. On the retail side too, the Australian housing market's stellar performance over the last few years, as well as unemployment from the resources sector, have led to worries about a property market slump and negative implications for the bank's mortgage books.  How rate cuts and fiscal policy reforms will help Asia While these concerns are certainly valid and credit costs are likely to increase from the very low levels they have enjoyed over recent years, corporate balanc...