From Chris Joye today:
One of the most enduring legacies left by the royal commission will be more conservative and risk-averse banks. This process was already underway after the Australian Prudential Regulation Authority (APRA) embraced the 2014 financial system inquiry recommendation that the banks deleverage.
Since then the four majors have raised more than $50 billion in tier one equity and reduced balance-sheet leverage from more than 25 times to around 18 times today. Given a static return on assets, lower leverage translates into smaller returns on equity, as we have seen.
