Banking Matters

Current and future banking trends from Australia and across our global network.

 

Major Banks Analysis - November 2016

This years Major Banks Analysis indicates annual cash earnings at Australia's four major banks have fallen for the first time since the global financial crisis, with the result partly driven by 'one-off' items at individual banks, rising bad debt expense and slowing credit growth in the second half of the 2016 financial year. 

These results reflect a slowing of momentum, particularly in the latter stages of FY16, with a noticeable softening in the majors' traditional growth drivers. There are however signs of focus and action as they prepare themselves for a new, less certain, banking environment.

Results
  • Aggregate cash earnings for the year fell 2.6 percent, to $29.8 billion
  • Combined return on equity dropped 127 basis points to 13.75 percent
  • The common equity tier 1 ratio increased 24 basis points to 9.8 percent
  • Net interest margins decreased by 1 basis point year-on-year
  • Bad debt expense rose 39 percent for the year to $1.5 billion, highest since 2012

 


"Viewed in isolation, these are solid results. However, when you look at the challenges ahead, it’s clear the majors are going to need to push very hard in the future to maintain their current level of performance, which explains some of the actions we’ve already seen them take.  Within these results we can see signals that the banks are beginning to take some of the tough decisions necessary to thrive in the new environment."

Colin Heath, PwC Banking and Capital Markets Leader
 

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