Australian banks dubbed most profitable, third year in a row
(25 June 2013 – Australia) Australian banks are well ahead of all other lenders in 10 major developed countries, triggering further criticism about their market dominance and massive profits.
For the third year running, Switzerland-based Bank for International Settlements (BIS) declared Australia’s big four banks the most profitable in the developed world.
Big bank profits are likely to exceed A$26 billion this year, and figures showed the Commonwealth Bank of Australia (CBA), Westpac, ANZ and National Australia Bank (NAB) made better returns last year than lenders in other well-off countries including Canada, the United States, Britain and Europe.
BIS said pre-tax profits for the big four were equal to 1.18 percent of their total assets, placing them well ahead of all other wealthy nations on the list, with lenders only in the emerging economies of Brazil, Russia, India and China making better returns.
The league table shows Australian banks have lower costs than most of their peers and enjoy wider interest margins, a measure of profitability from lending.
The big four control 83 percent of the lucrative mortgage market, after several smaller lenders were taken over during the global financial crisis.
In late 2010, the Gillard government made changes designed to put more competitive pressure on the big four and the issue will be examined again as part of a financial system inquiry if the Coalition wins government in September.
But the Chief Executive of the Australian Bankers' Association (ABA), Steven Munchenberg, said the banks' superior profits were explained by the economy's resilience.
''There's a little bit of the Steven Bradbury effect - we've been doing so well because everyone else has fallen over,'' Munchenberg said.
''The big difference between Australia and the rest of the world is we've had 20 plus years of uninterrupted economic growth.''
In response to a sharp slowdown in loan growth since the global financial crisis, banks have embarked on deep job cuts. The Finance Sector Union says the big four cut more than 3300 positions last year, and 1300 jobs so far this year.