SYDNEY, Nov. 13 (Xinhua) — Australia’s big four banks have all registered an increase in their 2023 full-year profits, against the backdrop of interest rate hikes and the still too high inflation.
On Monday, Australia and New Zealand Banking Group Ltd. (ANZ) became the last among the four main banks, after the Commonwealth Bank of Australia (CBA), Westpac, and National Australia Bank (NAB), to hand down its annual report, recording a full-year cash profit of 7.4 billion Australian dollars (4.7 billion U.S. dollars), an increase of 14 percent year on year.
“We continued to strengthen our balance sheet and closed the year with provisions for potential credit losses higher than prior to the pandemic, and with more capital than ever before,” said ANZ Chief Executive Officer (CEO) Shayne Elliott.
“This is critical as we enter a period of continued high interest rates, rising costs, and geopolitical tensions,” he added, noting that the full impact of rate hikes is expected to continue to overshadow economic activity plus household and business budgets.
Last week, Australia’s largest retail bank CBA announced a 6 percent rise in cash net profit which hit 10.2 billion Australian dollars, while the cash earnings of NAB were up 8.8 percent to 7.7 billion Australian dollars in the 2023 financial year.
Despite resilience displayed by the Australian economy in the face of slowing growth and growing financial stress on households and businesses, CBA CEO Matt Comyn touched on the “signs of downside risks building.”
“Rising interest rates have a lagged impact on mortgage customers and other cost-of-living pressures become a financial strain for more Australians,” he noted.
As early as Nov. 5, Westpac revealed that its annual net profit jumped by 26 percent on the previous year to 7.2 billion Australian dollars.
That was built “on the back of growth in key markets, including deposits, mortgages, and institutional banking,” said the bank’s CEO Peter King.
As per calculations by the consulting giant KPMG, these four major banks have reported a combined cash profit after tax of 32.5 billion Australian dollars, up 12.4 percent compared to the 2022 financial year.
The combined cash profits for the first half of the 2023 financial year amounted to 17 billion Australian dollars, slightly higher than about 15.4 billion Australian dollars for the second half.
Steve Jackson, head of banking and capital markets at KPMG Australia, said that it had been another very strong full-year result for the majors “which have continued to grow during the year, despite cash profits and net interest margins falling in the second half, as strong competition and rising funding costs offset the benefits of higher interest rates.”
Meanwhile, analysts also estimated that the four major banks are likely to see revenue and earnings moderate in the future.
“While competition in the critical home loan segment has eased, the market is likely to remain highly competitive,” EY Asia Pacific Banking Consulting Leader Douglas Nixon observed, when speaking of the slowing growth in mortgage and business credit.
Besides, the cost of staff and technology continued to soar, along with higher interest rates and inflation squeezing household finances and businesses.
The net interest margin also declined in the second half compared to the first half for all of the banks, Nixon added.
