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NAB sees ‘years of modest economic growth’ ahead

Speaking at National Australia Bank’s (ASX: NAB) annual general meeting in Melbourne on Thursday, the bank’s chairman, Michael Chaney, cautioned that economic conditions remain mixed and urged the government not to impose new regulations that could hinder the bank’s ability to lend to customers.

Although the bank has recognised improvements in the share market and house prices, Chaney said that consumers remained cautious regarding the outlook for the economy while the labour market has remained soft. This has restrained spending over the year. Meanwhile, the high Australian dollar has also weighed on exporters over the last 12 months.

Chaney declared: “It seems that Australia is faced with at best some years of modest economic growth and rising unemployment. Business conditions are subdued and unless economic reform and restructuring continue, are likely to remain so.”

Additional regulations and restrictions that have been imposed on the financial services industry over the last five years have created additional costs and complexity for the system. They were also a key focus at Westpac’s (ASX: WBC) AGM. With the government now set to undertake a major inquiry into the sector, Chaney argued that any new regulations should take into consideration how it could affect the banks’ ability to remain competitive in the global market and continue to lend to customers.

Although the NAB’s outlook for the economy remains uncertain, NAB’s CEO Cameron Clyne stated that the bank was in a solid position to benefit from a pick-up in business activity. While the bank remains Australia’s largest business lender, it seems that the level of satisfaction amongst its customers continues to fall further behind that of its big four rivals, scoring just 6.9 out of 10 in the November DBM Consultants’ Business Financial Services Monitor.

ANZ’s (ASX: ANZ) average satisfaction score has climbed considerably since April, achieving a score of 7.4. Meanwhile, Westpac and Commonwealth Bank (ASX: CBA) also achieved a 7.4 and 7.5 rating respectively.

Foolish takeaway

Each of the banks have fallen in value in recent weeks, making them more appealing prospects for income investors. However, at today’s prices, there are still better opportunities that could deliver you with greater returns in the long-term.

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Motley Fool contributor Ryan Newman does not own shares in any of the companies mentioned.

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