PwC analysis: Major banks post strong earnings growth as AI and fraud prevention take centre stage

Thursday, 12 November 2026

Australia's major banks have delivered strong earnings growth, with combined cash earnings rising 8.1 per cent to $32.5 billion, as lending mix, artificial intelligence (AI), productivity and fraud prevention become increasingly important to the sector's future performance, according to new analysis from PwC Australia.

PwC Australia's Major Banks Analysis: Full Year 2026 found that while the banks delivered improved profitability and cost discipline, intensifying competition, emerging credit risks and technological change are reshaping the sector.

The analysis also highlights the challenge of translating widespread AI adoption and productivity initiatives into measurable financial benefits, alongside growing investment in combating increasingly sophisticated fraud threats, including deepfakes and synthetic identities. 

Key findings include:

• Earnings growth: Combined cash earnings rose 8.1 per cent to $32.5 billion, while return on equity increased to 11.4 per cent.

• Productivity gains: Operating expense growth slowed to 1.2 per cent, down from 6.8 per cent in FY25, with the expense-to-income ratio improving to 48.1 per cent.

• Technology investment: Technology spending increased 2.2 per cent to $9 billion, as banks continued to invest in AI and tech modernisation.

• Fraud prevention: Banks are deploying AI-enabled fraud detection, biometrics and real-time monitoring to respond to increasingly sophisticated threats.

• Shifting lending dynamics: Business lending grew at more than twice the pace of housing lending, while mortgage demand softened.

• Emerging credit pressures: Credit impairment expenses increased 56 per cent to $3.8 billion as banks strengthened provisions against a more challenging economic outlook.

PwC Australia's Banking and Capital Markets Leader, Noel Williams, said the results demonstrated the sector's resilience, but also highlighted how the drivers of future performance are changing.

"The major banks have delivered a strong financial result, supported by lending growth and disciplined cost management. But the more interesting story is how the foundations of growth are shifting," she said.

"With competition intensifying and credit risks emerging, banks will need to continue investments in systems and workforce to deliver better outcomes for customers, supporting them to safely grow."

AI investment grows as banks focus on productivity

The analysis found that the major banks are reporting widespread AI adoption, although demonstrating its direct contribution to financial performance remains challenging.

While income per employee increased 4.5 per cent and operating expense growth slowed significantly, productivity improvements are occurring alongside traditional cost management measures, including simplification, restructuring and technology modernisation.

"AI presents a significant opportunity for banks to improve efficiency and transform the way they operate, but adoption alone isn't a measure of success," Williams said. 

"The focus is shifting from how widely AI is being used to the value it can deliver. Understanding that impact will be increasingly important as banks look for sustainable productivity improvements or outperformance in growth." 

Fraud prevention emerges as a key application of AI

Fraud prevention is among the most visible areas of AI investment across the major banks, with institutions strengthening their capabilities in real-time transaction monitoring, machine-learning detection, biometrics and advanced analytics.

The analysis highlights the growing sophistication of technology-enabled fraud, including deepfakes and synthetic identities, and the opportunity for banks to take a more connected approach to fraud prevention across payments, lending and the broader customer lifecycle.

In home lending, this includes using AI and analytics to verify customer information and identify suspicious patterns earlier in the application process, rather than relying solely on traditional credit risk indicators.

"As fraud becomes more sophisticated, banks need to be equally sophisticated in how they respond," Williams said.

"AI offers opportunities to identify suspicious activity earlier and strengthen prevention across the customer lifecycle. This is particularly important in lending, where fraudulently obtained loans may not immediately show signs of financial distress.

"Investing in these capabilities is about more than managing financial risk. It's also about protecting customers and maintaining trust in the banking system."

Financial resilience remains strong amid emerging pressures

The analysis also found that business lending continues to underpin growth as mortgage demand slows and competition from smaller lenders intensifies. 

Credit impairment expenses increased 56 per cent to $3.8 billion, reflecting a more challenging economic outlook and emerging pressures in parts of the loan book.

Despite these challenges, the major banks remain well capitalised, with a common equity tier 1 capital ratio of 12.1 per cent, well above the regulatory minimum. 

"The banks enter this next phase from a position of financial strength, though the operating environment is becoming more complex," Williams said.

"Maintaining that resilience while investing in technology, managing emerging risks and responding to changing customer expectations will be critical to their future performance."

Read PwC Australia's full Major Banks Analysis here.