News: WBC Australian banks better prepared for crisis than in 2008 -RBA

SYDNEY, Dec 15 (Reuters) - Australian banks are better prepared to deal with an economic downturn than they were prior to the 2008/09 global financial crisis, with much higher holdings of liquid assets, a senior central bank official said on Tuesday.

"Banks are well capitalised," said Jonathan Kearns, Head of Financial Stability at the Reserve Bank of Australia (RBA).

The average Tier-1 capital ratio for Australian banks has nearly doubled since 2007 to almost 14% now, Kearns noted in a speech to an online banking event.

"Importantly they have large buffers which are there to be used, not preserved, and will enable them to continue lending and supporting their customers, and so the economic recovery."

Australian banks are also profitable, he added. In 2019, the combined profits of the banking system totalled A$34 billion ($25.6 billion) while their return on equity, at 11%, exceeded their cost of equity.

Separately, Australia's prudential regulator on Tuesday removed limits on dividend payouts by banks, saying the banking system could handle a "very severe" economic downturn.

Australia's A$2 trillion economy has fared better than much of the developed world thanks to its early success in curbing the pandemic. Preliminary data for the December quarter points to strong growth in the period after 3.3% growth in the third quarter.

($1 = 1.3275 Australian dollars)