This morning APRA released its January banking statistics and it is no surprise to see the downtrend in deposit growth being entrenched. In January deposits grew just 0.23%:
Year on year growth is falling fast, down now to 7.3%:
Total deposits are leveling off:
This will be the combination of the income blow from the falling terms of trade and the stock market rally sucking out savings. Deposits represent roughly 60% of liabilities so using the back of the envelope, if credit growth passes 4.3% then money will need to come from wholesale markets, which it already is.
But if it accelerates at all from here, offshore borrowing is going to need to grow to fund new loans. We are swiftly approaching a cross-roads in Australia’s post-GFC financial stability. APRA’s great test looms.