Westpac CEO David Morgan got away with a
bemusing observation while delivering
yesterday’s results – the discovery that the bank was in an “economic sweet
spot”. Memo Dr Morgan: Australia’s banks have been riding the sweet spot for
the last dozen years which is why they couldn’t help doing so outrageously
well, making it possible for them to overpay their CEOs.

Elsewhere, Morgan alluded to why it’s
really autumn – the foreigners really are coming and being felt in the market
place. I think every record profit announcement I’ve been to during banking’s
long golden summer has included the CEO saying competition is tough and getting
tougher, but now they’re finally telling the truth.

No wonder some folks get confused. In The
Oz
, Richard Gluyas picked the mixed message, but The SMH ran two different stories with, well,
different stories. Elizabeth Knight explained the obvious that Westpac’s profit rose because its business volume
rose, but claimed: “He has
taken his market share up in most of the bank’s lending categories (other than
in small to medium-sized enterprises).”

Um, that doesn’t
gel with what Jessica Irvine was reporting on the same page:

The intense competition has produced another period of
below-market lending growth for Westpac. Business and mortgage lending grew
just 11% from the previous first half, compared to market growth of 13% for mortgages and 17% for business lending.

That’s a bank losing market share. The
justification is that Westpac is being more cautious than its opposition about who
it lends to. Should autumn turn into winter, it will look smart. In the
meantime, well, autumn can be a tricky season, one capable of confusing bankers
and journalists alike.

Peter Fray

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