The outgoing chairman of the prudential regulator, Wayne Byres, has warned banks against unwinding provisions to boost reported profits in the face of challenging economic conditions, as interest rates rise and house prices fall.

In his final speech to the finance industry, Mr Byres reinforced the importance of efforts to build up bank capital in the eight years since the financial system inquiry, and described the assessment of the global economy at last weekend’s IMF meetings as “sobering”.