Deposit growth falls to two year low

APRA released its October banking statistics this morning and the news is that Australia’s spectacular deposit growth is coming to an end, unsurprisingly as national income comes under pressure from the mining bust delays and rate cuts deter savers. The month on month growth rate fell to its lowest since April 2010:

And the year on year growth rate fell to the lowest since October 2010 with a clear range break below 8%:

This is probably OK for now but is likely to continue, and if the RBA succeeds in stimulating greater demand for credit to offset declining mining investment, then it is only a matter of time before either:

• the banks must borrow more offshore
• credit availability will become an issue
• the nation rushes through superannuation changes to channel more savings to banks

Watch the calls for a new Wallis Inquiry grow and watch the ratings agencies.

MBS October 2012