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Credit Growth Forecast to Half by 2027, Tighten Bank Funding, Jefferies Says

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Credit growth is forecast to halve by 2027, which will tighten rather than ease bank funding, and revised deposit modelling shows the sector's loan-to-deposit ratio rising, driving banks to compete more aggressively for a shrinking pool of funding, Jefferies said in a Thursday note.

Recently acquired deposit pricing data points to a second half of fiscal 2026 spread tailwind, but deposit scarcity dominates thereafter.

Commonwealth Bank is expected to remain the primary deposit beneficiary, reflecting its scale and long-dated hedge book.

The investment firm assigned a buy rating to National Australia Bank (ASX:NAB) with a price target of AU$44.96 per share. It assigned hold ratings to both ANZ Group (ASX:ANZ, NZE:ANZ) and Westpac (ASX:WBC, NZE:WBC), with price targets of AU$33.71 per share and AU$34.95 per share, respectively.

Commonwealth Bank of Australia (ASX:CBA) was assigned an underperform rating with a price target of AU$144.40 per share.

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