The credit profiles of Australia's Big Four banks remain steady, amid counter-balanced emerging forces of regulation and low operational risk, Standard & Poor's Ratings Services said in a report published yesterday. "A benign economic environment in Australia, banks' low risk appetite, and conservative [and proactive] regulation underpin our stable outlook for the country's banking sector," said Standard & Poor's credit analyst Sharad Jain."We believe that a build-up of economic imbalances has eased following a period of rapid growth in house prices in Sydney and Melbourne over the past two years."Risk appetite and governance standards in the country's banking sector remain very conservative by global standards, is S&P's house view. That, in conjunction with conservative and proactive regulation, should help the banks avoid any major increases in losses due to operational, market or credit risks, the agency said."Robust growth in lending to the household sector - which remains very profitable - should offset subdued opportunities for growth in profitable lending to the corporate sector, particularly with increasing capital requirements," S&P said. "In addition, we note that the banks have been able to arrest the declining trend in net interest margins - possibly temporarily - through active repricing of their loan portfolios," the S&P report observed.At the same time, the major banks' stand-alone credit profiles would strengthen "if clarity emerges" that an increase in regulatory capital requirements would push their Standard & Poor's risk-adjusted capital ratios above ten per cent."Nevertheless, Standard & Poor's issuer credit ratings on the larger Australian banks would come under pressure if the move to establish a framework for the bail-in of banks' senior debt or additional loss absorbing capital gathers momentum," Jain added.S&P also expects "greater clarity" to emerge in 2016 on the government's and the regulator's stance in relation to a bank resolution framework. "Likewise, we consider that further clarity on future regulatory capital standards -both the degree of changes and timeframe for their implementation - for these banks is likely to emerge in 2016, in particular when the latest round of review of capital frameworks (popularly termed Basel IV) is concluded at the Basel Committee on Banking Supervision," S&P said via a media statement.