Major Banks Analysis May Half Year 2017
Current and future banking trends from Australia and across our global network.
Australia’s major banks had to work hard to return to growth, with a solid outcome in the first half underpinned by trading income, cost control and a reduction in bad debt expenses. Credit growth was primarily driven by home lending, which highlights an increasing dependence on domestic retail operations. This means that the banks are further exposed to the combination of subdued economic conditions and regulatory focus on the Australian mortgage lending market. As a result we expect that the banks will continue to re-think their business and operating priorities for the future as the need to genuinely differentiate escalates.
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It is evident the banks are taking large steps to respond to the challenges faced by the market, taking advantage of technological opportunities and responding to a faster-moving environment; reshaping their cost bases in the process. We believe this reflects a broader realignment that is taking place around operating models. As the banks truly focus on their points of difference, we expect to see more attention on how their operating models need to change to support these capabilities and maintain performance. Our Hot Topic: Future operating models sets out a series of different approaches that could be taken to help banks ‘win’ in the future.
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Colin Heath, PwC Banking and Capital Markets Leader
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