Foreign banks left behind in the rush

Foreign banks are missing out in the rush to gather deposits, according to the latest data from the Australian Prudential Regulation Authority.

APRA's September 2008 Quarterly Bank Performance Statistics, released yesterday, show that the 10 foreign banks subsidiaries surveyed increased total deposits from $107.4 billion in September 2007 to only $108.9 billion a year later.

The 34 foreign bank branches went backwards. Their deposits fell from $127.7 billion to $120.9 billion over the same period.

Deposits banked with the majors went from $861.5 billion to $1.06 trillion over the same period, and deposits at the other domestic banks went from $172.9 to $213.3 billion.

On the asset side, the September quarter figures offer no evidence that foreign banks are reducing their exposure to the Australian consumer or commercial loan markets. The foreign bank subsidiaries and branches grew their assets over the year to September at a slightly faster rate than the local banks.

Foreign subsidiaries increased their housing loans from $55.5 billion in September 2007 to $70.5 billion a year later and increased term loans from $30.5 to $35.7 billion over the same period.

Foreign bank branches increased gross loans and advances from $74.1 billion to $89.6 billion over the same period.

The foreign banks have not escaped the problem of deteriorating credit quality. Charges for bad and doubtful debts among foreign subsidiaries rose from $277 to $475 million in the year to September and charges at foreign branches jumped from $43 to $279 million over the same period.