Yahoo Finance Australia’s banks ‘the most profitable in the developed world’
The Bank of International Settlements (BIS) found that Australia’s major banks saw a higher rise in pre-tax earnings as a share of their total assets compared to banks in other developed countries.
Fairfax Media reports that the Commonwealth Bank, Westpac, ANZ and National Australia Bank have continued their run as the developed world’s most profitable for four years straight.
According to the BIS annual report, the banks’ pre-tax earnings rose to 1.28 per cent last year, which was higher than Britain, the United States, Japan and European countries such as Switzerland and Germany.
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Second on the list of most profitable banks in the developed world was the United States, with earnings of 1.24 per cent of assets.
Canada trailed the US with returns of 1.04 per cent while Sweden came in fourth at 0.77 per cent.
Last year, Australia’s big four reported total profits of $27.2 billion, while they are expected to make $29.7 billion this year.
But four emerging economies - Brazil, Russia, India and China - outperformed Australia in terms of their banks’ profitability, with Russia leading the way with pre-tax profits of 2.04 per cent.
This report on the notable profitability of Australia’s ‘big four’ comes as an inquiry seeks to probe the nature of competition within our country’s financial system.
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Former Commonwealth Bank chief executive David Murray will head the inquiry with an interim report due out in mid-July.
Smaller regional banks and consumer groups say the big four reap such profits because of a lack of competition, and are pushing for regulation changes to curb the big four’s advantages, especially in the mortgage market.
But the Australian Bankers Association argues the banks’ profitability is simply a result of the economy and not because of a lack of competition, according to Fairfax.
