‘SPOTLIGHT’ BANK SECTOR REPORT – A WORLD-FIRST INITIATIVE IN HELPING INVESTOR
OUTLOOK AND EXPECTATIONS11 April 2012: Research from Macquarie and East reveals there is a very
clear link between demand side, customer predictive measures of market behaviour
and bank deposit growth within the Australian economy. The East/Macquarie
predictive model of business deposit growth suggest that growth is likely to
slow to around 4 to 5 per cent and with it, bank profitability.
The Macquarie Equities Research and East & Partners ‘Spotlight’ bank sector
report series is building a suite of predictive analyses around bank sector and
individual bank stock performance in a response to the headwinds now confronting
Australia’s banks.
Macquarie and East’s research has revealed a strong shift away from Term
deposits towards At Call deposits, with businesses turning to cash over debt
facilities for working capital and liquidity needs.
According to East & Partners Principal Analyst, Paul Dowling, a key takeout from
the research was that “Given the importance of cash, businesses across all
segments have become more price sensitive”.
“The research clearly demonstrates that bank customers are switching more
frequently and at lower rate points than they were pre-GFC, testing individual
bank abilities to hold deposits on their books.”
Macquarie Securities Banking Analyst, Michael Wiblin, added: “The research has
shown us that growth will slow to 4 to 5 percent as profit growth moderates’.
“Significant and clear linkages have been established between both
system-wide/top-down profit growth and bottom-up profit/cash on balance sheet
growth”.
Flat demand for lending, increasing funding costs and Basel III capital adequacy
requirements are confronting the banks with significant margin and profitability
challenges. Macquarie and Easts’ forecasting of likely outcomes using leading
demand-side predictors is a world first initiative in helping investor outlook
and expectations for the bank sector.
For more information please contact:
Sian Dowling
East & Partners Pty Ltd
Telephone: +61 2 9004 7848
Email: sian.d@eastandpartners.com
Michael Wiblin
Banking Sector Analyst, Macquarie Group
Telephone: +612 8232 6089
Email: michael.wiblin@macquarie.com