Jefferies sees Australian bank funding pressure rising by mid-CY27

ANZ group

08/07/2026 20:25

** Jefferies sees credit growth halving by mid-CY27, tightening bank funding rather than easing it
** Brokerage forecasts banking sector's loan-to-deposit ratio will rise, making banks compete more aggressively for a shrinking pool of funding
** In an environment of scarcer deposits, we expect banks to compete more aggressively for a smaller pool of funding, compressing deposit spreads and therefore profitability, Jefferies said
** Jefferies notes Commonwealth Bank of Australia CBA.AX and Westpac WBC.AX have benefited more from higher rates than ANZ ANZ.AX and National Australia Bank NAB.AX since 1H22, reflecting their larger domestic deposit franchises
** Brokerage sees this advantage fading with interest rates now near their peak, reducing dispersion in deposit-driven earnings across the majors
** Jefferies expects CBA to remain the primary deposit beneficiary, reflecting its scale and long-dated hedge book
**  ASX Financials sub-index .AXFJ is up 2.7% so far this year, as of last close

 (Reporting by Nikita Maria Jino in Bengaluru)
 ((Nikita.Jino@thomsonreuters.com;))