AUSTRALIAN BANKS LOOK TO SUSTAINED GROWTH IN 2007.

MELBOURNE, Jan 1 Asia Pulse - Australia's big four banks look set for another year of sustained growth, although the financial institutions may be stretched to match the record annual profits already achieved.

Lending growth remains strong, costs are being managed while bad and doubtful debts are likely to remain under control after hitting new lows in the year just gone.

The banks' share prices are likely to rise in line with earnings, which is going to be around nine per cent to 10 per cent, but this will be lower from fiscal 2006 when profits rose by as much as 16 per cent.

ANZ chairman Charles Goode set the scene when he told shareholders at its December annual general meeting that Australia's third largest bank is expecting weaker profit growth as its unusually low provisions against bad debt start to return to normal.

Last year, ANZ reported a 16 per cent lift in annual net profit to a record $3.69 billion.

It's also looking for a new chief executive to replace John McFarlane, who looks set to go at the end of 2007.

Burdett Buckeridge & Young banking analyst John Buonaccorsi believes the sector is moving gently higher but is fully priced.