Australian banks' deposit growth hit 9% in 1H14

While loan growth sticks to 6%.

According to Moody's, deposits continued to grow faster than loans, but the differential eased towards the end of this period. A slightly higher proportion of savings were allocated to higher-yielding, non-deposit products. 

Banks also increased their focus on gathering stable deposits at the expense of running down less-stable wholesale deposits. With improved wholesale market conditions, banks issued more debt abroad.

Here's more form Moody's:

Liquid asset growth slowed, suggesting that banks are closing in on their anticipated requirements under the Basel III Liquidity Coverage Ratio (LCR) regime, which will come into force in 2015.

We continue to view the structural reliance of the Australian banking system on wholesale funding, in particular from abroad, as its greatest rating sensitivity. Nevertheless, we expect the banks’ funding conditions to remain resilient, and broadly stable, for the rest of 2014.

Customer deposit growth continued to outpace loan growth, albeit at a marginally slower pace towards the end of 1H2014. Deposits grew 9% year-on-year for most of 1H2014, while loan growth remained moderate, at 6% on average, as high prepayment rates on existing home loans offset a sharp pick-up in new originations.

Business lending rebounded but remained lower than home loan growth, as business confidence remained variable. We expect customer deposit growth to maintain its lead over loan growth for the rest of 2014, but for the gap to narrow gradually.