RBA: Floods' impact limited
The Queensland floods and cyclones "could impinge on banks' asset quality to some extent", but their impact should be limited, says the RBA Financial Stability Review.The Review says the cyclone-hit and flood-hit regions account for a relatively small share of banks' lending, and most of the affected businesses should be able to resume operations fairly quickly."The floods are unlikely to cause a major increase in housing arrears to the extent that borrowers remain in employment," it says. Measures of business conditions and confidence are also expected to recover quickly.Smaller institutions, with predominantly Queensland-based loans, are likely to be more noticeably affected, the Review says. It notes that two regional banks - presumably, Suncorp and Bank of Queensland - have increased their bad debt charges in their latest half-yearly reporting periods because of the flooding. The Review also notes the claims' impact of the cyclone and floods on general insurers but says the insurance industry is "well equipped to deal with this".