(27 July 2011 – Australia) The Reserve Bank of Australia (RBA) assistant governor Malcolm Edey said Australian banks need to “get real” when expecting double-digit growth.In speaking notes prepared for a Property Council seminar in Darwin on Monday assistant governor Malcolm Edey said while Australian banks had come through the crisis in good condition with lost profits restored, it was unlikely they would ever again enjoy ‘the days of consistent double-digit growth in lending we saw in the pre-crisis years’.
‘That growth was driven in part by factors that can’t be repeated – the deregulation of the financial system and the transition to low inflation.
”In the post-crisis environment, borrowers and investors are more cautious, both at home and abroad.
”That’s likely to mean less demand for leverage and more reliance on equity funding, even when the economy itself is growing strongly.”
Mr Edey also said that the slower credit growth would be good for the financial stability, but would also mean lending institutions had to get used to lower rates of expansion.