Australian October Consumer, Business Lending Growth Slows

By Jacob Greber

Nov. 28 (Bloomberg) -- Lending to Australian consumers and businesses grew at a slower pace in October, even as the central bank embarked on the biggest round of interest-rate cuts since a recession in 1991.

Total credit provided by banks and other financial companies rose 0.6 percent from September, when it gained 0.8 percent, and 9.7 percent from a year earlier, the weakest annual increase since June 1992, the Reserve Bank of Australia said in a report released in Sydney today. The median estimate of 15 economists surveyed by Bloomberg was for a 0.5 percent monthly gain.

Central Bank Governor Glenn Stevens has cut the benchmark interest rate since early September by two percentage points to 5.25 percent on concern economic growth is slowing faster than forecast. He will probably reduce borrowing costs again next week by three-quarters of a percentage point, according to nine of 17 economists surveyed by Bloomberg. The rest tip cuts of half a point and one point.

Lending to businesses rose 1.1 percent in October and 13.2 percent from a year earlier, today’s report showed.

Loans to consumers to buy houses advanced 0.5 percent for an annual increase of 8.6 percent.

Credit provided to consumers for purchases other than housing fell 1 percent from a month earlier and dropped 0.1 percent on the year.

To contact the reporter for this story: Jacob Greber in Sydney at jgreber@bloomberg.net