Australia consistently ranks strongly in global comparisons of financial markets, and the country’s high standard of corporate, financial and regulatory governance makes it a model in the world. Of the 134 countries surveyed by the World Economic Forum for the Global Competitiveness Report 2008-09, Australia ranked seventh in the world for the sophistication of its financial markets. The same survey also ranked Australian banks fourth for the soundness of their balance sheets, behind only Canada, Sweden and Luxembourg. These rankings support Sydney’s claim as a leading centre for global finance in the Asia Pacific.

The strength and sophistication of Australian banks have been major factors in the country’s remarkable record of economic resilience over the past 17 years, and have allowed the financial system to cope better with the current global financial crisis than those of other advanced nations. According to both the OECD and IMF, Australia’s banking sector remains well capitalised and profitable, is prudently managed and has high asset quality. Of the world’s largest 100 banks, only 12 had credit ratings of AA or higher in early 2009, four of which were Australian.

Australian banks continue to maintain very sound balance sheets with a low incidence of non performing loans (NPLs). The NPL ratio of banks operating in Australia was the second lowest in the world in early 2008, according to the International Monetary Fund's (IMF) Global Financial Stability Report, October 2008. The NPLs to total loan ratio of Australia's banks stood at 0.3% in March 2008. Other countries in the region recorded significantly higher ratios, including Thailand (7.9% for 2007), China (6.7% in 2007), Malaysia (6.6% in 2007), Singapore (1.8% in 2007), Japan (1.4%), Hong Kong SAR (0.8%) and Korea (0.8%).