Survey: Australian banking system third most profitable globally
(4 March 2010 – Australia) Australia’s big four banks have maintained their position amongst the largest and most stable global financial institutions, as the nation’s banking sector is ranked the third most profitable in the world.
The majors of the Australian financial industry delivered a post-tax Return on Equity (ROE) last year of 15.3 percent, according to a report by Boston Consulting Group.
This puts the domestic sector only behind Switzerland and Canada.
The Commonwealth Bank of Australia ranked the second-most-profitable in the world, after Canadian Imperial Bank of Commerce, recording a ROE of 18.6 percent.
The report listed CBA as the 13th largest globally by market capitalisation; Westpac was 19th, ANZ 24th and National Australia Bank 27th.
The Industrial and Commercial Bank of China, worth around US$230 billion, was named the world’s biggest bank, and the rest of the top ten rankings were dominated by its fellow Chinese mega-banks and a number of US banks.
Despite almost collapsing and having to be rescued by the US administration, Citi was the best-performing bank on a relative total shareholder return basis last year, with a 22.6 percent return.
Only one Australian bank, ANZ, recorded a top-10 return, coming in ninth at 4.8 per cent.
"These outcomes clearly reinforce the value and importance of strong regulation in financial markets and the historically prudent management of risk by the Australian banks in their domestic markets lending," commented Paul Dowling East & Partners' Principal Analyst.
"It is also important to have this systemically strong performance recognised in the way in which the new Basel capital rules for banks are deployed across the Australian bank community"
"The ongoing management of lending margins has become critical in maintaining this enviable record," Mr Dowling added.
This puts the domestic sector only behind Switzerland and Canada.
The Commonwealth Bank of Australia ranked the second-most-profitable in the world, after Canadian Imperial Bank of Commerce, recording a ROE of 18.6 percent.
The report listed CBA as the 13th largest globally by market capitalisation; Westpac was 19th, ANZ 24th and National Australia Bank 27th.
The Industrial and Commercial Bank of China, worth around US$230 billion, was named the world’s biggest bank, and the rest of the top ten rankings were dominated by its fellow Chinese mega-banks and a number of US banks.
Despite almost collapsing and having to be rescued by the US administration, Citi was the best-performing bank on a relative total shareholder return basis last year, with a 22.6 percent return.
Only one Australian bank, ANZ, recorded a top-10 return, coming in ninth at 4.8 per cent.
"These outcomes clearly reinforce the value and importance of strong regulation in financial markets and the historically prudent management of risk by the Australian banks in their domestic markets lending," commented Paul Dowling East & Partners' Principal Analyst.
"It is also important to have this systemically strong performance recognised in the way in which the new Basel capital rules for banks are deployed across the Australian bank community"
"The ongoing management of lending margins has become critical in maintaining this enviable record," Mr Dowling added.
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