From UBS today comes results from the latest semi-annual bank survey, which revealed that bank loan officers and CFOs expect loans to grow at only 2.2% over the next 12 months – significantly less than predicted in prior surveys:
We were struck by the significantly more bearish outlook the CFOs and CROs are anticipating – materially more cautious than in previous surveys. This comes despite a series of rate cuts, a weakening AUD and signs of house and CRE price inflation. In particular, their expectations for credit growth over the next twelve months averaged just 2.2%, with the 0-2% category the most common response. Surprisingly the banks indicated that demand for home loans remains very subdued, with concerns over unemployment and consumer confidence more than offsetting the benefits of rate cuts. None of the banks indicated an expectation that demand for home loans will increase over the next six months. Trends in business credit were equally subdued with economic conditions and industry specific issues leading to a tightening of underwriting standards, partly offset by increased competition, especially in the institutional space. Consistent with consumer lending none of the CFOs or CROs expect a pick-up in SME or Institutional lending.
According to the Reserve Bank, total private sector credit grew at 3.0% in the year to May 2013, and annual growth of 2.2% would see credit growth fall to the lowest level since April 2010 (see next chart).
And from UBS, the very dour results:
