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Stay calm and look to the fundamentals, NAB’s Executive Director and CEO Australia Ahmed Fahour and Group Chief Economist Alan Oster advised in an open letter to investors and customers in the wake of recent global financial market volatility.
A clearer understanding of what’s happening will give better insights into likely future developments, potential pitfalls and, importantly, opportunities, they explained.
The volatility stemming from US markets is very much a combination of a traditional housing cycle, very poor lending standards, falling house prices and a slowing in consumer spending. Added to that has been a repricing of risk.
For the US, the prospect is for a period of flat to poor growth. Inevitably, global financial markets have reacted. However, Australia is currently experiencing very strong and increasing growth, high levels of business confidence and strong demand for our products from key trading partners – especially China – where the economy is growing at 12 per cent.
Clearly, Australia is in a very different situation to the US. Our major financial institutions – including NAB – remain in very robust health. The sub prime market, which accounts for around 15 per cent of the US mortgage market, represents less than 1 per cent in Australia.
While Australian households have used lower rates to become more geared, real incomes are rising substantially, unemployment is at record lows and defaults remain historically low. Nationally, Australian house prices are rising and are expected to continue to do so.
A better understanding of the dynamics at work will not only help peace of mind, but also highlight possible opportunities. In that context, we invite you to talk to our trained financial experts about how NAB can help you manage your way successfully through volatile times.
Ahmed Fahour, Executive Director & CEO Australia, NAB
