Kelly sings APRA's praises

APRA is an "excellent regulator", Westpac CEO Gail Kelly declared at yesterday's investor presentation.

Inspectors are" in our organisations all the time, they look at portfolios one relative to the other in our organisations, St George relative to Westpac for example. They're able to compare across the sector," she said.

They are there "all the time [to] test and verify, test and verify," Kelly said.

"This is a hallmark strength of the Australian system that we have that's active and attempts supervisory approach very different from some regulators."

Putting a cautionary foot on the debate over the sufficiency of bank capital, Kelly said: "we think there is a requirement for more discussion as we go into the next stage of the financial system inquiry and before any recommendations actually land up being enacted."

She asked for "more of the conversation about the trade-offs and the interconnectivity between growth and stability.

"You can increase capital and become ever more safe, but that does come at a cost.

"And the increasing of capital [49:39] ultimately having a diminishing return in terms of safety but the costs are real," she said.

"Capital is not free. And those costs will flow through to impact the economy more broadly."