WESTPAC’S senior leaders have cautioned that growth across the Australian financial services sector will remain modest over the medium term as consumers and businesses pay down debt and curb spending.
The slower pace of growth is part of a broader structural shift in the banking landscape, prompting banks to overhaul their businesses, the bank said.
”The uncertainty and volatility created by the European sovereign crisis are contributing to more cautious customer behaviour and lower growth,” Westpac said in an update to shareholders released yesterday. The comments come as closely watched credit growth figures released by the Reserve Bank show lending across Australia remained subdued during May, with mortgage lending mostly flat.
”Businesses and consumers are more conservative in their approach with a preference for lower levels of gearing and increased saving activity,” said the joint update by chief executive Gail Kelly and chairman Lindsay Maxsted.
”As a result, growth remains uneven and activity remains soft in those sectors that rely on consumer demand, non-commodity exports and tourism.” However, activity in mining and other related sectors remained solid. In a separate update to shareholders – also issued yesterday – rival ANZ said that even in the face of softening global economic growth Australia and New Zealand remained well placed.
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