PM urges banks to ‘lean into the economy’
(25 September 2019 – Australia) The major banks have been quick to jump on Prime Minister Scott Morrison’s appeal for less caution on lending, saying they are ready to increase loans across all sectors.
On Tuesday Mr Morrison urged the banks not to become sheepish on lending because the economy relies on them to back great ideas. He asked lenders ‘to lean into the economy’ while learning from the Hayne Royal Commission and doing ‘the right thing’ by their customers.
The call from the Prime Minister comes at a time when banks face intense competition from foreign banks and non-banks lenders also seeking to win new business in a sluggish environment for credit growth.
But the prudential regulator is attune to the risks that too much competition can bring to the majors.
“We now find ourselves at an interesting juncture," APRA chairman Wayne Byres said in a speech this month. "It is worth remembering that the original risks we were concerned about in 2014 – high prices, high debt, low interest rates and subdued income growth – have not gone away, and in some cases increased.
"When it comes to the supply of credit, it would therefore be unwise for lending standards to be allowed to erode again as a means of generating lending growth."
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