Have we reached the tipping point?

EY’s 2013 Australian major banks full-year results analysis
(November 2013)

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The 2013 full-year result announcements of Australia’s major banks may mark a tipping point when it comes to determining whether the sector is experiencing a major recovery or simply a repositioning in a stubbornly low growth and cautious environment.
- Paul Siviour, Oceania Banking and Capital Markets Leader

EY’s analysis of the full-year results of the big four banks shows that they have delivered a record profit outcome of $27.4 billion. Each of the major banks has delivered an increase in cash earnings of at least 7.6% year-on-year on a post-tax basis. These strong cash earnings results have been assisted by a lower level of credit provisioning, which reflects the combination of low interest rates and low credit growth, heavy cost management and improved deposit re-pricing. Net interest margins however continue to be under pressure from intense competition, coupled with a structural shift and ongoing deleveraging from corporate Australia.

The Australian banks have continued to meet the challenge of etching out at or above expected market earnings and dividends in a low growth environment. This is highly commendable amid the continuing challenges of the global banking industry and in light of the increasing demands for capital, liquidity and higher compliance expectations from regulators, both locally and globally.

In this edition of Banking Agenda we reflect on the overall performance of the major banks’ full year results. We also comment on the opportunity and challenge for the banks in the wealth sector and the role for our banks in the expected new wave of infrastructure projects.

Click here to view our report.

Click here to view the summary of key results.

Please feel free to contact me or your EY representative and as always we welcome your feedback.

Paul Siviour
Paul Siviour
Sector Leader
Banking & Capital Markets
Phone: +61 2 9248 4188

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