The reality of the 2011 lending business is hitting home, if the rather gloomy tone of the latest profit round is any guide. Earnings are up. Australian banks are the envy of their overseas counterparts. Yet the cover of KPMG's latest bank profit review reads: "A predictable result heralds an unpredictable future.' And PricewaterhouseCoopers' half-year profit analysis asks: "The big question is: where will future earnings growth come from?" ANZ's Mike Smith encapsulated the concerns when he told ABC Lateline last week: "If we look back at the era before the crisis, we had 20 years almost of a bull market run where lending growth was significantly higher than GDP growth. And that's all finished. Those days are over." The graph tells the story. In early 2011, twelve-month bank lending growth (the red line) is running at 5.3 per cent. That's slightly lower than the (nominal) growth rate of the economy. It's also the lowest credit growth figure since the dark days of early 1993. And it's low enough to make quite a few people nervous about lending's future. It's just how the economy is recovering that is making some in the industry worry. First, a business investment boom is going on, but it's concentrated in mining - the industry least dependent on the banks. Outside mining, trade-exposed businesses are taking a hammering in areas like tourism and manufacturing, and are trying to cut their borrowings; only agriculture is borrowing more than before the crisis. Slow household formation means many retail businesses are flat too. In late 2010, commercial lending - the thin blue line on our chart - was briefly shrinking by as much as eight per cent a year. And second, consumers have suddenly turned cautious. They spent the boom using their mortgages as an endless line of credit. Now they've raised their savings rates and they're slashing their mortgages.  Housing lending growth -  the broken blue line on the graph - has slumped. This second development should worry bankers most. Over the past 30 years, households have borrowed more than ever before, and they've borrowed most of it against housing. But we don't know as much as we'd like to about the underpinnings of this transformation. In October 2007, before the global financial crisis had developed, the Reserve Bank of Australia's deputy governor, Ric Battelino, gave a speech in which he set out that the 30-year run-up in household borrowing had been historically unprecedented. "Has the expansion of household credit run its course?" Battelino asked. "Will it reverse? We cannot know the answer to these questions with any certainty." Since October 2007, housing lending has risen by another 61 per cent in nominal terms, which simply underscores Battelino's point. Housing loans are in uncharted territory. This uncertainty is probably