In fact we have already seen growth in home lending, business lending and personal credit fall to below trend since earlier this year.
Slumping demand, falling incomes and higher interest costs are all having an impact on demand for money, but probably the most destructive has been the financial market turmoil and credit crunch which has pushed share prices south.
The Commonwealth Bank said in its 2009 outlook statement in August that it was looking at below trend growth, without elaborating on what that meant.
The head of the ANZ Bank, Mike Smith has hinted at tougher times ahead by slashing middle management employee numbers, but no one said it quite as directly as the incoming new head teller of the NAB yesterday.
National Australia Bank Ltd (NAB) chief executive designate Cameron Clyne says the bank would face declining revenue growth amid difficult times for the next two to three years.
A gloomy forecast, and yet the shares jumped more than 7% or $1.68 to close at $24.66: that's a rise of $3.06, or more than 13% in two days. The overall market was up just over 8% in the same time.(But won't be today after Wall Street got worried about recession and fell).
Mr Clyne said that tighter credit conditions over the next two to three years would mean it is "not unreasonable to expect lower revenue growth", although the implications for NAB's profitability would depend upon cost containment and risk management.
The NAB hasn't slackened on cost containment: its cost to income ratio was 46.9% in the 2008 year and is now the lowest of its peers after costs fell 2% across the group during fiscal 2008.
Mr Clyne was speaking to the media after the bank yesterday confirmed last week's guidance and reported a 10.7% drop in cash earnings to $3.9 billion.
"Cash earnings from ongoing operations of $3,916 million for the September 2008 year decreased by $470 million or 10.7% on the September 2007 year," the bank said in commentary.
"Underlying profit increased by $996 million or 13.9%. This reflects good revenue growth stemming from the Group's market leading position in business banking in Australia, successful repricing initiatives in all regions and strong performance in nabCapital's Markets business."
The bank earned pre tax and provisions around $8.1 billion, which is a profit margin of just under 50%. Very tasty indeed. That was on revenue that rose 4% to $16.257 billion in the year to September.
"A disciplined approach to cost management has been maintained however, cash earnings have been reduced by a higher bad and doubtful debts charge mainly relating to Asset Backed Securities Collateralised Debt Obligations in nabCapital."
In last week's earnings guidance, the NAB indicated it will be looking to further strengthen its capital position in response to the ongoing global economic uncertainty.
Yesterday, the bank and Mr Stewart repeated that determination.
NAB will continue to seek to raise capital equivalent to the shortfall in its dividend reinvestment plan for the next two dividend payments. It will also continue to explore opportunities to utilise its Tier 1 hybrid capacity.
NAB declared a final dividend of 97c, taking the total dividend for the year to $1.94, which was up from $1.82 in 2007.
On the profit outlook, Mr Stewart said: "I'm very bullish - if you take out the [one off provision] all the other businesses were well and truly up.
"I see no reason why that won't continue into the future albeit in slowing economic conditions and more difficult markets."
Mr Stewart said the solid 13.9% rise in underlying profit excluding provisions to $8.1 billion was " marred by the provisions required against conduit assets in the nabCapital securitisation business, reflecting unprecedented conditions in global markets".
He said in a statement that "while significant, the loss of approximately $1 billion incurred by nabCapital is considerably less than write-offs by many of our global peers.
"The strength of the group's underlying profit growth allowed this loss to be absorbed and still deliver cash earnings of $3.9 billion.
"Our core banking franchises have performed well despite great volatility in financial markets."
Mr Stewart said the bank's Australia business continues to perform well with strong revenue growth, while the UK was resilient amid very difficult market conditions and the New Zealand bank delivered solid revenue growth.
"Our liquidity is very strong with liquid assets of $66 billion, more than double the pre-market dislocation levels," Mr Stewart said.
"These conservative capital, funding and liquidity settings are considered appropriate in light of the continuing uncertainty about global credit market conditions.
"I am confident NAB's operations are well placed to weather this uncertain environment, with the appropriate focus on core businesses and the right financial settings to maintain strength and flexibility."
NAB said it was well provisioned and that total provisions now stand at $3.29 billion.
In Australia, cash earnings grew by 15.8% and revenue increased by 10.1%, over the prior corresponding year.
But bad and doubtful debt charges were up 55%, reflecting the tightening in the credit environment and a slowdown in economic growth.
"The charge includes increases across the portfolio, with higher specific provisions generated across business and private banking and in particular, the impairment of one large business client in the March 2008 half," NAB said.
NAB said it had under taken significant work to ensure risk associated with the Australia lending book was actively managed and priced appropriately.
"Asset quality is in good shape with 90 days past due stabilising and is flat on the first half of 2008," it added.
