Survey participants still remain cautious after the GFC, and are focused on maintaining good asset quality but at a level that does not constrain the growth of assets through overly conservative lending practices.
The failures of finance companies are stark reminders of the risks involved in this sector.
The past five years have seen numerous receiverships as depositors fled, and lending assets went sour. Receivers continue to seek to recover funds for depositors left out of pocket, but asset recovery has proved difficult.
The resilient have survived and are now preparing for the challenges to come, in a significantly more regulated and condensed industry.
A snap shot of the performance of the sector
- Asset growth is starting to recover, as growth outweighs the deleveraging or run off of lending assets,
- Profits have seen a healthy increase, fuelled by an improved net interest margin and substantially decreased impairment expense.
Participants are also seeing improvements across all major credit quality measures as distressed assets of the past are exited or written off and carefully managed, although management remain cautious around the writing of new business.