Australia’s banking system has been ranked above its equivalents in the US, the UK, Japan, Germany and Singapore.
Morningstar has evaluated the strengths and weaknesses of banking systems in 22 countries by assessing factors in four areas: economic, political, competitive and regulatory.
Australia, Canada and Switzerland were all rated as having “very good” banking systems, while Belgium, Chile, Hong Kong, Singapore and Sweden all received “good” ratings.
A “fair” rating was given to banking systems in China, Columbia, Denmark, France, Germany, Japan, Mexico, the Netherlands, Spain, the UK and the US.
Brazil, India and Italy were the only three countries to receive a “poor” rating.
Stephen Ellis, Morningstar’s director of equity research for banking and financial services, said the research assessed the stability of banks’ traditional financial intermediary businesses as well as their non-intermediary businesses.
“We also introduce a rigorous analysis of the banking systems in which banks operate, which is critical to our confidence in the sustainability of a bank’s excess returns and evaluating the likelihood of value-destroying events,” he said.”