While the impact may not be that large for bad debts, it may indicate that residential loan growth is going to be an issue going forward."īut Mr Johnson says the results also point to an alarming rise in home loan arrears, albeit from a very low base. "The trend is increasing and it has a couple of impacts. "If they stay where they are, it's not a concern, but the problem is the trend," Mr Mesurier said. The bank results reaffirm that households remain cautious, saving more than they have for decades. Consumers remain cautiousĪnother concern for banks and politicians is how consumers will behave in the months ahead. "This time around, most of that excess debt seems to have been funnelled into households, and the end result is that as interest rates rise, people are having a lot of trouble basically keeping their consumption patterns up and paying off the home loan, so the end result is that everything slows down," he said. Mr Johnson says credit has been growing faster than GDP for much of the past 15 years, a situation which cannot continue indefinitely. "[But I wouldn't like to see two, and especially not two in a row," she said. Ms Kelly says Australia can cope with one further interest rate rise later on in the year. "I think that the economy, as I say, is multi-speed right now, and I think it would be difficult to put a brake on," he said.
"In many respects the economy probably couldn't withstand an interest rate rise just at the moment." "So even that would not necessarily be impacted by an interest rate rise.
"Part of the rebound we're seeing in business credit is actually because in many cases we've had negative system growth and businesses are actually dealing with some quite critical investments they need to face into, having not invested in the last couple of year," he said. NAB chief executive Cameron Clyne has warned the Reserve Bank against an interest rate rise. "We've been waiting for some time for corporate lending to pick up," he said. Mr Mesurier says there is concern over loan growth and in particular what may happen to residential lending. Interest rate rise?Īnother drag at home for all of the big four has been the tepid rates of growth in business lending, which is only now showing signs of recovering. So I think we'd like to see more in a sustained way," she said. "It's really been only two months and been quite modest at this point. Westpac chief Gail Kelly says she backs her bank into Australia's future. "Westpac had the lowest level of growth, but the best margin outcome, but because the growth was low and they had very little in the way of trading gains, they seemed to be the biggest loser in this most recent reporting period," Mr Mesurier said. On the other hand, ANZ was buffeted by the high Australian dollar, which trimmed some of the profits from its Asian business. "Basically where repricing continues to drive the margin up, and they've had a very good cost outcome, and once again you've seen a much lower loan loss charge." "The media is reporting that it's largely driven by the personal bank, whereas when you actually look at the numbers, it's largely coming through in the business bank," he said. "Their margin actually went up, notwithstanding the fact they had high levels of growth," he said.īrian Johnson, a banking analyst with CLSA, says NAB's share price was the only one to bounce on the release of its results. The prognosis from the bank profit reports released this week was reasonably good - given the infirmity of other developed nations - with the big four's profitability up 7 per cent to $12 billion.īut there were some troubling spots found which could turn nasty - the profits were helped by a decline in bad debts, while quality revenue growth and improved lending margins were hard to come by.Īfter investors pored over pages of results and analysis, the National Australia Bank looked to be the preferred stock.īrett le Mesurier, a banking analyst with BBY, says NAB's margin rose in the March quarter.
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