As usual, the end of the month sees APRA releasing the bank balance sheets for the previous month (June 2011).
Overall, the picture of lending in Australia is one of a negative trend. The graph below is annual year on year growth rates of each of the lending sectors. Owner Occupied and Investment home lending growth is at its lowest for 20 years - and the trend is pointing down. Personal lending, having dipped into negative growth during the GFC, is touching the zero growth line again. Business lending growth is just outright negative (minus 2.7% year on year) and has been negative since June 2009.
Below is the breakdown of the latest annual growth rates of each of the major banks in each of the sectors. Macquarie shows the withdrawal of the bank from home loan lending. You can see that Macquarie has a large growth rate in deposits due to the Government guarantee. The Government deposit guarantee expires in October and it will be interesting to see what it is replaced with and therefore the potential impact on Macquarie to continue to fund its book via deposits.
The figures illustrate the success NAB has had in attracting new home lending business with its advertising campaign and more aggressive lending rates.
Overall, given the negative trends in most sectors of bank lending, and given the diabolical performance of the retail stocks, you would be hard pressed to believe that the RBA would lift rates next Tuesday. Opinion on the direction of interest rates is the most polarized it has been for a long time. ANZ's economist believes interest rates will go up next Tuesday, and Westpac believes the next move will be down. HSBC believes nothing will happen this year, but probably a rate rise next year. I believe the CPI figure was a one-off, and after removing volatile items, the trend remains within an acceptable range.
The only result coming out of the US is that spending will be cut, and most of Europe and the UK is on an austerity drive. Less government spending will simply mean less income to the non-government sector. This not the environment for interest rate increases.