Five years after the global financial crisis, the Commonwealth Bank executive leading its push into institutional stockbroking, Ian Saines, believes there is light at the end of the tunnel for the sector.
As brokers grapple with weak market turnover, Mr Saines said conditions appeared close to a low in the cycle, and there were reasons to be optimistic about a recovery.
He made the comments as he outlined a cautious approach to Asian expansion, saying the bank would not adopt a "me too" strategy of higher-risk investments in the region for their own sake.
Mr Saines told BusinessDay it was too simplistic to say sharemarket turnover would be permanently lower, with conditions "closer to the bottom than the top" and Australia's market better placed than those overseas.
"I think people too quickly jump on to these catchphrases that it's all over," said Mr Saines, who runs the bank's institutional and markets division.
"Will it get back to 2006-07 levels any time soon? Probably not, but by the same token I think current conditions are at the lower end of what you'd expect over a longer-term cycle.
"Australia has a very mature, deep equities market. Australians like equities and I think there's reason to be relatively optimistic compared to other parts of the world on the Australian market, because Australia is disproportionately likely to grow in the future."
The comments follow a global market rally that has lifted the ASX 200 index 11 per cent this year.
Retail investors have also shifted money into shares in recent months, with margin lending in the March quarter growing for the first time since late 2009. Mr Saines said a key reason for the market gains was quantitative easing policies, such as those in the US and Japan. Further use of such policies would support demand for shares. "As long as you've got an expansion of money supply globally, equities will be ... a beneficiary of that, and other asset prices as well," Mr Saines said.
Unlike ANZ, NAB and Westpac, CommBank has in recent years made a push into the institutional broking market dominated by investment banks. It also owns the dominant retail broker, CommSec.
Institutional broking represents a small part of the overall business, but the push has occurred as brokers grapple with a profit squeeze caused by skinnier margins and much lower trading volumes.
Mr Saines said a swing factor in any recovery was a rise in business borrowing and investment, which would lead companies to raise more equity. Business credit growth slowed to a one-year low of 1.6 per cent in the year to March, raising hopes a turning point may be near.
"It's hard to see it can go much below zero for a sustained period of time," Mr Saines said of business credit growth. "We're closer to the bottom than the top."
Amid anaemic domestic credit growth, big banks - led by ANZ - are looking to expand into Asia's fast-growing market. But Mr Saines said CommBank was not "geographically focused" on Asia, instead following client needs into the region. "We are not running some me-too Asia strategy," he said. "The Commonwealth Bank's risk appetite means that we'll only deploy capital outside our home market where we're sure we have a distinct competitive advantage."