Banking Matters

PwC's Banking Matters provides in-depth analysis of the financial results of the major Australian banks and also explores current and future banking trends from Australia and across our global network.

Current edition

Major Banks Analysis

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Absorbing the shock and preparing for tougher tests to come 

Bank earnings in 1H20 fell below $9b for the first time since the GFC, and ROE below 7% for the first time since the 1990s. Thanks to longstanding headwinds on margins and lending growth, alongside the costs of remediating historical issues and restructuring the business model, earnings and returns were already headed lower relative to recent years, and this was augmented by unprecedented credit charges triggered by the COVID-19 crisis.

Although its full impact remains to be seen, the crisis reminds us of the inherent fragility of the economic order, and the role banks can play to buttress it. Key areas of uncertainty as we look forward are: credit, capital, notable charges for remediation and reshaping the business and macroeconomic conditions.  

At this early stage in the crisis, the banks have made a critical role absorbing the initial shocks of COVID-19, providing credit, liquidity and forbearance for business and personal customers alike. As a result, perceptions of the industry are changing in ways no one could have imagined just a few months ago. 

Soon, however, the focus for Australia will shift from hibernation to transformation, and for banks from merely absorbing shocks to fulfilling the full complement of banking services, including allocating capital, supplying liquidity, delivering other financial services and, most importantly, providing counsel and advice. 

It’s what banks are there for: Banking 101. For these reasons, we call it the ‘Kairos moment.’



Hot Topic: The rate that stops a nation?

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Preparing for lower or even negative rates in Australia

On Melbourne Cup Day, and again in December, many bankers breathed a sigh of relief when the Reserve Bank of Australia (RBA) announced a pause in the rate cutting which has taken the cash rate to 0.75%, with many expecting it to go lower to 0.25% within the next year.

Although the RBA downplay the possibility, Australians need to confront the very real scenario of interest rates going to zero or below, something that has already occurred overseas.

Australian banks, investors, businesses and other stakeholders now need to understand how negative rates are possible, what they mean for them, and how to prepare for a future economy which will look very different from the one they’ve known for a long time.

In our latest Banking Matters Hot Topic we explore the implications of negative interest rates (NIR) on banks and the Australian economy more broadly, and address four key points around NIR:

  • Capitalism won’t break, and rates can go negative
  • Serious financial challenges from negative interest rates
  • Three kinds of readiness required from banks and other institutions
  • 'No-regrets' actions to take now to ensure preparedness


Banking Matters

PwC's Banking Matters series incorporates our regular Major Banks Analysis and industry Hot Topic.

Our Major Banks Analysis provides in-depth analysis and commentary of the financial results of the four major Australian banks, with insights for local and global banking communities.

Our regular Hot Topic explores current and future banking issues and trends, addressing important challenges, opportunities and imperatives facing the banks including risk, regulation, remediation, transformation, workforce, technology, leadership, executive accountability, pricing and cost management.

At the same time, we bring together the right mix of advisers and contributors from inside and outside of PwC demonstrating that important problems are better solved together. PwC is a powerful multiplier of connections and innovation, we bring passionate people together so that insights become impact, opportunities become outcomes and society benefits.

We call this, The Together Effect.


Contact us

Colin Heath

Banking and Capital Markets Leader, PwC Australia

Tel: +61 3 8603 0137

Julie Coates

Financial Services Industry Leader, PwC Australia

Tel: +61 2 8266 2006

Sam Garland

Banking & Capital Markets Partner, PwC Australia

Tel: +61 3 8603 0639

Jim Christodouleas

Banking and Capital Markets Solutions and Capability Leader, PwC Australia

Tel: +61 3 8603 2065

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