Australian Bank Profitability Improves - APRA
(21 June 2018 - Australia) According to APRA’s Quarterly Authorised Deposit-taking Institution (ADI) Performance Statistics, net profit after tax advanced by A$3 billion year-on-year, or nine percent, to reach A$36.4 billion for the year ending 31 March 2018.
Total assets expanded by three percent and the capital base increased by six percent. The capital adequacy ratio and liquidity coverage ratio (LCR) rose 0.4 and 8.3 percentage points respectively. The Quarterly ADI Performance Statistics publication provides bank, credit union and building society industry aggregate statistics, comprising data on financial performance, financial position, capital adequacy, asset quality, liquidity (for credit unions and building societies only) and key financial performance ratios.
There were 148 ADI’s at the end of Q1 2018, a net increase of 1 since Q4 2017. The cost-to-income ratio for all ADIs was 48.5 percent, up three percentage points, confirmed income growth is being outpaced by cost growth. Return on equity continues to climb, increasing from 11.7 percent to 12.3 percent since Q1 2017. Total assets increased by A$136 billion to A$4.67 trillion, predominantly underpinned by strong mortgage lending growth through the first quarter. The common equity tier 1 ratio (CET1) for all ADIs was 10.7 per cent, an increase of ten percent since Q1 2017.
APRA’s quarterly profitability results come at a time when bank profitability is increasingly influenced by regulatory change, digital technology and innovation. According to AusPayNet, consumers made more than 8.3 billion card payments in 2017, equal to a rate of almost 23 million transactions a day. Among the technological shifts driving lower cash usage and greater uptake of digital payments is the New Payments Platform (NPP) that became operational in February 2018 and move away from ATM cash withdrawals to EFTPOS usage.
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