Australian banks continue to face fallout from misconduct inquiry
(7 November 2018 – Australia) Australia’s big four banks have reported a 5.5 percent drop in overall cash profit in the 2018 financial year as the country’s banking sector continues to feel the fallout of tougher trading conditions and a government inquiry into misconduct.
Commonwealth Bank of Australia, the country’s biggest bank by assets, said net interest margins were lower in the quarter to September due to higher offshore funding costs and tough competition in the home loan market, when reporting its 5 percent fall in profits.
Australia’s Royal Commission has uncovered a swath of bad behaviour, prompting tougher regulatory scrutiny and sharp declines in banks’ share prices. This has coincided with a slowdown in the housing market that is denting credit growth for banks, and higher offshore funding costs due to interest rate rises in the US.
Australia’s big four banks have responded by selling off insurance and wealth divisions to simplify their businesses, increasing remediation payments to customers and spending more on legal and compliance.