Dour outlook for credit growth

The growth in the balance sheet is a striking, though expected, feature of the ANZ March profit.

ANZ reported growth of 25 per cent in a year, taking assets to $438 billion. That's two and a half times the growth rate of the prior year.

This growth takes funding, and in difficult markets.

Total deposits and borrowing increased 13 per cent over the half and 26 per cent over the year, to $264 billion.

Of this, term deposits increased 29 per cent to $82 billion while other deposits bearing interest increased only 11 per cent to $96 billion.

Certificates of deposit, a measure of wholesale funding, jumped 50 per cent over six months and by 100 per cent over 12 months, to $47 billion.

Lending increased 10 per cent over the half and 19 per cent over the year to $323 billion.

This rate of growth may change, and not because of credit rationing and a capital shortage as such, but rather because of a stark drop in demand.

ANZ forecasts credit growth in Australia of 12 per cent this year, nine per cent in 2009 and less than eight per cent in 2010.

The bank expects the rate of growth in demand for business credit to halve over two years.

The outlook in New Zealand is almost as bleak, with the difference being that NZ created its own credit shock, while both Australia and New Zealand are now importing one.