Latest stats from the RBA show that the sharp contraction in business credit has slowed, but growth of personal credit (mainly mortgage finance) is at its lowest rate since the early 1990s and is trending downwards. Credit growth does not have to fall below zero for it to have a negative impact on the economy. A fall in the rate of credit expansion will slow the rate of economic growth.
And so as some commentators say…….”The Great Correction continues”.
It is obvious that lower credit growth means lower profits for the financial institutions that depend on leverage.
They are already reacting to this by lowering their cost base and moving their operations to the lowest possible cost overseas environments.
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