Analysts have said one direct impact on Australian banks from the recent tumult could be higher costs of wholesale borrowing, but King said domestic banks were not under pressure to quickly raise wholesale money.

“Wholesale markets are a little bit fraught at the moment but because we’re all well advanced on our funding programs for this year we can sit it out,” King said. “It’s going to feel strange for me to say this, but things are working pretty well domestically for us.”

‘It’s going to feel strange for me to say this, but things are working pretty well domestically for us.’

Westpac boss Peter King

Comyn also noted the increase in funding costs, saying funding spreads were about 20 to 50 basis points wider. But he also highlighted the strength of the local sector, saying the big four banks were all in the top five best-capitalised banks in the world.

“I think the Australian banking system, and credit to the policy frameworks as well, [is] in an extremely strong position, I would say uniquely, globally,” Comyn said.

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While Comyn and King emphasised the banking sector’s resilience in the face of recent market jitters, they also reiterated the banks were preparing for higher levels of customer stress as a result of higher interest rates.

Westpac is expecting one more rate rise from the RBA, and King said the banking giant was looking for customers who might need financial help to cope with higher rates. He said customers with high levels of debt relative to income were at higher risk, and the bank expected more delinquencies among these borrowers.

“The part of the portfolio we’re watching very closely is high debt-to-income – so they’re the people that have borrowed, probably at their maximum capacities. If things haven’t played out as they expected, they might need help.”

CBA also expects one more interest rate rise, subject to Wednesday’s figures on inflation. Comyn said CBA was more wary towards industries including construction, commercial property and aged care. He said the bank did not expect a “rapid deterioration” in the economy, but more households would come under pressure over the year as interest rate rises flowed through.

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“Everything that we can see at the moment, we think it’s entirely manageable, there will be some pockets of difficulty and stress, but absolutely we’re very focused on our long-term goals,” Comyn said.

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