Commonwealth Bank of Australia (ASX: CBA) has given an enforceable undertaking to the Australian Securities and Investments Commission (ASIC) after soliciting customers to increase credit limits. The bank warned customers they might not have the opportunity to increase their limits, with the pending commencement of new credit laws designed to avoid exactly that type of solicitation, according to a story in today’s Australian Financial Review.

In the overall scheme of things, the agreement with ASIC won’t have much impact on either the bank’s profits or reputation – the incident is likely to be forgotten by consumers before long.

The actions of the Commonwealth Bank do highlight the urgency with which the company is looking to stimulate credit growth. For a couple of decades, the company and its big four brethren National Australia Bank Limited (ASX: NAB), Westpac Banking Corporation (ASX: WBC) and Australia and New Zealand Banking Group (ASX: ANZ) rode the credit wave to seemingly endless profit growth. Rising house prices and a free-spending consumer were music to the banks’ ears.

That momentum has slowed to an absolute crawl, with the number of houses changing hands dropping significantly, and personal debt growth stalling as consumers repair household balance sheets.

There’s no evidence that there is a clear link between CBA’s actions and its slowing credit growth, but make no mistake – banks will be looking harder for ways to achieve growth in credit and to cut costs (such as ANZ’s recent decision to reduce staff in Australia) to deliver profit growth.

It’s a brave investor who has a portfolio overweight in banks at this stage of the cycle.

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Scott Phillips is a Motley Fool investment analyst. You can follow him on Twitter @TMFGilla. The Motley Fool’s purpose is to educate, amuse and enrich investors.This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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