Australia: Economy strong but bank expansion uncertain
Australia saw 14 banks ranked in the 2011-2012 AB500 with combined assets totalling $2,706 billion and recording $22 billion in net profits, however a reduction in easy cash flow may hamper the growth of its banks. October 03, 2011 | ResearchAustralia’s strong economic recovery from the financial crisis has put its banks in stronger positions than its OECD counterparts, but future prospects remain hazy. The economy has posted strong growth, best seen during the first half of 2009 when the GDP saw a 1% growth against the impact of the 2008 crisis, while other developed countries were struggling hard to hang on, and Australia’s strong capital base allowed former PM Kevin Rudd to spend his way out of trouble without placing duress on the country’s cash. Table 1. Largest Australian banks by asset Please click to view enlarged image However, Australia’s fiscal prudence means that the rapid expansion that banks enjoyed pre-crisis may be over. The central bank, the Reserve Bank of Australia (RBA), has been reducing easy credit since the onset of the crisis, and Australia leads the OECD countries in its aggressive tightening: whereby other markets are stuck at zero, as of mid-2011 Australia’s cash rate is 4.75%, the highest among developed economies, and it is expected to rise further in the medium-term as the economy recalibrates. In the second half of 2011, banks will likely see their loan books further hit as households cut down on their use of debt, despite the fact that some of this will be offset by the benefits of existing interest payments made in a strong Australian dollar. Figure 1. Australian banks haven’t revived deposit franchises Please login to read the complete article. If you already have an account, you can login now or subscribe/register. Categories: Asia Pacific, Asian Banker 500, Databookasia pac,Asian Banker 500,Databook, Asia Pacific,Asian Banker 500,Databook, Keywords:Australia, RBA, OECD, ANZ, CBA, NAB, 2008 Financial Crisis Australia, RBA, OECD, ANZ, CBA, NAB, 2008 Financial Crisis
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