But deposit growth of 10 per cent in the same period following double-digit expansion over the past several quarters is set to weigh on the pace of lending recovery, particularly in higher-margin unsecured loans, into 2022.
“It’s a catch-22,” said Allan Small, senior investment adviser at Allan Small Financial Group with HollisWealth. “We want to see higher rates for NIMs but when you look at loan growth, it is definitely fuelled by lower rates.” “I’m not that positive on their bread-and-butter business,” said Ryan Bushell, portfolio manager at Newhaven Asset Management. “And in a world where their core business , I don’t think they’re going to be the double-digit return vehicles that they’ve been… certainly in the period from 1980 to 2010.”
“There’s lots of liquidity pretty much everywhere across the footprint,” driving a shift to secured lending in the retail portfolio, he said. “That, we believe, at least for the foreseeable future, is here to stay.”