Australian major banks FY2019 results

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Cushioning the country through the crisis 

Australian major banks half year results FY20

The COVID-19 pandemic has brought the global economy to a near standstill. The uncertain future has meant many households and businesses are holding back their spending and investment. Given their strong balance sheets, the majors are extending significant support to cushion Australian businesses and households through the crisis.

However, the banks cannot be expected to save the entire economy, they have to make sure that they allocate their finite resources in the right direction. Growing risk to earnings coupled with provisioning has reduced dividend payouts. Since the start of this year the majors have collectively lost approximately $116bn (~31%) in market capitalisation.

Download our half year report of the four majors, ANZ, CBA, NAB and Westpac to compare their results, their strengths and challenges across the key performance indicators of growth, efficiency, quality & risk, and capital & funding.

In each section we also pose a series of questions to assist to meet the response challenges and see the opportunities ‘in recovery’ from these unprecedented times.

Major banks half year results FY20

Download the report

Growth

Although the length and depth of the economic contraction is difficult to predict, the combination of anaemic revenue growth due to the loss of Australia’s economic momentum and the lower-for-longer interest rate environment, heralds a very challenging outlook for the banking sector.

Efficiency

Top-line growth will be challenging in the short to medium term, heightening the importance of strategic investment in transformational technologies to capture opportunities in the economic recovery and support a rebound in consumer and business confidence.

Quality & Risk

In its latest Financial Stability Review, the RBA noted that stress tests of Australian banks show they have sufficient capital to withstand quite severe downturns.

Capital & Funding

Across all four banks total funding has increased while maintaining a proportion of the customer deposit average of about 60% in total. With capital management initiatives in place plus existing robust capital, the banks are well placed to cushion the impact of COVID-19 for the country.

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