Increased dividend payout ratios and other measures that reduce capital are of concern to the Australian Prudential Regulation Authority.In an article in its journal, Insight, APRA highlights recent steps taken by the banks to "implement various capital management initiatives that have started to slow the build up of capital from profit retention.""Such initiatives have included removing discounts on [dividend reinvestment plans], raising actual and target dividend payout ratios, paying special dividends and neutralising DRPs.""Capital initiatives need to be carefully considered by ADIs to ensure adequate buffers are built and maintained above the Prudential Capital Requirement that APRA sets specifically for each ADI," said APRA.The regulator also pointed out that, from January 2016, "an additional capital requirement for those banks designated by APRA as domestic systemically important banks [ie, the major banks] will also apply."Other issues highlighted by APRA, in a survey of industry risks, centred on "the low interest rate environment domestically [which] is a key dynamic for the industry.""In the short term, lower interest rates can be supportive of ADI asset quality as they reduce interest payments, facilitate faster repayments of principal, and broadly support economic growth and employment. "Over time, however, systemic risks can build [up]. It will be important that ADIs maintain prudent risk appetites, sustainable levels of asset growth and sound lending standards, in particular by ensuring that new borrowers are able to afford higher repayments when interest rates ultimately return to more normal levels.APRA pointed out that the industry in Australia already met the capital targets under the Basel III capital framework, including additional regulatory buffers."Risk intensity" is also on the wane, APRA said, with the average credit risk weight for the major banks being two percentage points lower over the last year, at 35 per cent.The average credit risk weight for other ADIs also fell one percentage point, to 51 per cent, APRA said.