Reserve Bank (RBA) assistant governor Malcolm Edey says the weaker Australian dollar and the popularity of variable home loan rates have helped shield Australia from the full force of the global financial crisis.

Mr Edey gave a speech about the global economic outlook in Sydney this morning.

With Westpac the latest big bank to update investors, a clear picture is emerging of the health of nation's financial system.

Major banks are well capitalised; are enjoying a surge in lending and trading revenue. Interest margins are under pressure, but are being contained.

Of course all of this has been overshadowed by rapidly rising provisions over recent months, which combined with wealth management markdowns are pulling down cash earnings and potentially crimping dividends.

Update The Reserve Bank has highlighted recent sharp drops in global spending and business activity, suggesting more interest rate cuts to come as the bank battles to avert a recession in Australia.

The RBA also noted in minutes released from its February board meeting that the market was now expecting interest rates to ''trough'' at 2% later this year, without specifying its own plans.