22 September 2019

The banking sector has underperformed the Australian market since 2015, and the results for the year to 30 September 2019 suggests that another year or two of underperformance is still to come.

The latest results were dismal. Cash profits fell by 7.8% ($2.9bn) year-on-year. Revenue growth was minimal to negative as the big banks lost market share to their newer and more agile competitors. Banks’ cost to income ratio rose by 313 basis points on average, ranging between +200bp and +540bp. Net interest margins (the spread between banks’ lending rates and their cost of funds) narrowed for all banks, dropping as low as 1.94% for the first time. Customer remediation charges hit $4.6bn for the year, making a total of $8.0bn to date… [read more]