Australia on the way up despite risks
(30 April 2010 – Australia) Mike Smith, ANZ’s chief executive has said that Australia's economy has nearly made it through the economic downturn; however mirrored Ralph Norris CBA head's warning of the effect the debt crisis in Europe could have on local banks to access credit.
The bank’s head said that he expected pain in consumer lending to become apparent as unemployment proved to be less than expected.
Mr Smith highlighted in an interview that he thought Australia was through the major part of the downturn.
The bank’s corporate lending was weak, however in the pipeline were some loans waiting to be activated, adding that these types of loans were for longer-term projects.
Mr Smith said Australia was well placed to benefit from Asia's strength in the future.
However, a slower recovery in the US and sovereign debt issues in Europe are a major cause for concern for the ANZ chief executive, admitting that he was still quite worried about the global economy.
Europe is really very difficult to read and the sovereign issues have not been addressed with clarity, Mr Smith noted.
The uncertainty has continued and is possibly going to get worse because I think the contagion issue is now very real, he added.
European sovereign debt issues will not prove as significant as the global financial crisis but it is likely to impact investor confidence in Australia and the banks' access to credit markets, Mr Smith said.
In terms of the funding that the Australian banks have, in terms of their wholesale funding, obviously credit spreads are going to be more volatile, the bank’s head said.
Mr Smith highlighted in an interview that he thought Australia was through the major part of the downturn.
The bank’s corporate lending was weak, however in the pipeline were some loans waiting to be activated, adding that these types of loans were for longer-term projects.
Mr Smith said Australia was well placed to benefit from Asia's strength in the future.
However, a slower recovery in the US and sovereign debt issues in Europe are a major cause for concern for the ANZ chief executive, admitting that he was still quite worried about the global economy.
Europe is really very difficult to read and the sovereign issues have not been addressed with clarity, Mr Smith noted.
The uncertainty has continued and is possibly going to get worse because I think the contagion issue is now very real, he added.
European sovereign debt issues will not prove as significant as the global financial crisis but it is likely to impact investor confidence in Australia and the banks' access to credit markets, Mr Smith said.
In terms of the funding that the Australian banks have, in terms of their wholesale funding, obviously credit spreads are going to be more volatile, the bank’s head said.
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