The Australian Prudential Regulation Authority (APRA) has published its 2020 Year in Review, which reveals the impact of COVID-19 on Australia’s financial services industry.
By and large, the report indicates that the industry withstood the challenges caused by the pandemic last year, including dealing with significant disruption to their operations and workforces while assisting affected Australians.
APRA chair Wayne Byres said the financial system's stability played a major part in allowing the financial sector to perform its role of taking on risk and acting as a shock absorber for the rest of the economy.
“The strength of the financial system reflected a long period of investment in financial and operational resilience, in which APRA's strong prudential framework and ongoing supervision has played an important role,” Byres said. “As a result, APRA-regulated financial institutions – authorised deposit-taking institutions (ADIs), insurers, and superannuation funds – stood up to the challenge, both financially and operationally, and continued to fulfil their critical roles in society and the economy.”
As a regulator, APRA adapted to the uncertain environment last year by resetting and reshaping its priorities and activities – including providing regulatory concessions and reducing regulatory burden, supporting broader government stimulus measures and policy responses, and publishing additional data to enable a transparent and objective view of various measures' impact. It also guided institutions on capital management, particularly concerning limiting the payment of dividends at a time of heightened uncertainty.
In that regard, APRA has updated its Corporate Plan for 2020 to 2024. The regulator set out strategic objectives over the next four years, but paid particular attention to clearly articulating the immediate priorities over the next 12 to 18 months.
Speaking about the near future, Byres said the industry remains stable despite the challenging year. However, the environment ahead remains highly uncertain. “The full financial impacts of the events of 2020 are still to be felt, and in some ways, 2021 could be just as difficult as 2020,” he said.
