Lower Credit Growth to Pressure Deposit Volumes and Therefore Spreads

Research evidence excerpt

Lower Credit Growth to Pressure Deposit Volumes and Therefore Spreads

Australia | Banks EquityJulyResearch8, 2026

KEY STOCKS FEATURED INCLUDE:Lower Credit Growth to Pressure Deposit

TICKER RATING PRICE TARGETVolumes and Therefore Spreads

ANZ AU HOLD AUD33.71

We forecast credit growth to halve by mid-CY27, and yet counter-intuitively, CBA AU UNPF AUD144.40

this tightens rather than eases bank funding. Our revised deposit modelling NAB AU BUY AUD44.96

shows the sector's loan-to-deposit ratio rising, driving banks to compete WBC AU HOLD AUD34.95

more aggressively for a shrinking pool of funding. Recently acquired

deposit pricing data points to a 2H26 spread tailwind, but deposit scarcity

dominates thereafter. We therefore sit c5bp below cons on FY28E NIMs, a

KEY CHANGES INCLUDE:

5% PPOP headwind.

TICKER RATING PRICE TARGET

What does slower credit growth mean for deposits? Recent investor conversations around ANZ AU HOLD AUD33.71 (AUD33.98)

NIM outlook have focused on lower credit growth (here) driving greater asset spread pressure, CBA AU UNPF AUD144.40 (AUD142.26)

which we agree with, but also an expectation that this would be somewhat offset by less

NAB AU BUY AUD44.96 (AUD46.98)

funding pressure. We think this reflects bank earnings forecasts typically focusing on loan

growth, with far less attention paid to the funding side of the balance sheet. To address this, WBC AU HOLD AUD34.95 (AUD34.70)

we built two proprietary models: i) a top-down industry deposit model based on the monetary

survey identity to forecast system-wide deposit creation, which feeds into ii) a bottom-up

retail deposit model spanning nine product categories, leveraging newly acquired bank deposit Chart 1 - Actual vs. modelled M3 growth vs.

pricing data.