Earlier this week, Standard & Poor's (S&P) placed the entire Australian banking system on Negative Outlook. This implies that there is a one-in-three chance 25 Australian Banks' credit ratings may be downgraded within the next 2 years. S&P cited the continuing strength in property prices increases the risk of a sharp correction. This combined with record household debt could lead to widespread credit losses in the banking system. But it’s worth putting into perspective these risks in the context of the strength in bank balance sheets and trends in lending indicators where owner-occupier and investor credit growth has moderated as a result of tighter lending standards and macro-prudential policies.