Surveys show a stark divergence between consumer confidence, which is wallowing near recession-like levels, and buoyant business conditions including high profitability. | Clancy Yeates
Senior business bankers at the Commonwealth Bank and National Australia Bank say the economy can pull off a soft landing despite rising interest rates crimping household spending, amid a boom in lending to small and medium firms.
“I’m cautiously optimistic that we’ll avoid recession. The one thing that I do worry about is the availability of skills and demand for labour, which remains incredibly high,” Vacy-Lyle said in an interview., said commercial property lending had slowed, but lending for working capital remained strong.
Saadie also nominated skills shortages as the key risk. More positively, he said the COVID-19 pandemic had prompted firms to improve their balance sheets, and added that pressures on supply chains appeared to be abating. Business banking has wider profit margins than retail banking, and although the boom in lending to firms is expected to slow, the sector is likely to remain a critical battleground for banks.
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