Australia’s banks likely to reduce lending to regions and sectors at risk of climate change impacts, regulator says

Apra’s climate vulnerability assessment said modelling from the banks suggests lending losses in Queensland could increase by 35% after 2030. Photograph: Bradley Kanaris/Getty Images

Banks expect to reduce lending to households and businesses in northern Australia and to fossil fuel industries across the country as the risk of losses due to the climate crisis escalates, the industry regulator says.

A new report by the Australian Prudential Regulation Authority (Apra) found climate change could make banks more vulnerable to economic downturns as they face up to a threefold increase in lending losses by 2050, but that the system should be able to absorb the impact.