Australia has a sophisticated banking sector, underpinned by robust regulation and supervision. Our banking institutions continued to perform strongly during and following the GFC, thereby enhancing the sector’s reputation internationally.
During the 2018/2019 FY, the Australian banking sector continued to perform strongly relative to overseas peers. Our banking institutions remain profitable and well-capitalised (albeit some banks more so than others).
However, significant industry headwinds exist. The strategic agenda for many Australian banking institutions is currently dominated by: fundamental structural changes due to automation; growing competition from non-bank and non-traditional lenders; and heightened regulatory scrutiny.
Source: Gen Advisory analysis, October 2018.
Gen Advisory’s research to date into the Australian banking sector is presented below.
Banking Sector Update & Outlook – 1H 2019
In the first half of 2019, the four major Australian banks reported a combined cash profit after tax of A$14.5 billion – a 4.0% decrease from 1H 2018. This decline in profitability was attributable to the following factors:
- • Subdued credit growth due to a cooling housing market and softer domestic economy;
- • Tightening credit standards;
- • Post-Royal Commission remediation costs;
- • Increased regulatory and compliance spend; and
- • Increased capital requirements for the four majors’ New Zealand subsidiaries.
Source: Gen Advisory analysis, May 2019.
How GA can help financial institutions address industry and regulatory changes
Drawing from our toolkit of services, ways in which Gen Advisory can help financial institutions anticipate and respond to changes in the banking sector include the following:
- • Providing the institution’s Board with regular industry updates – both domestic and international.
- • Providing the institution’s Board with regular regulatory updates – both domestic and international.
- • Providing input into the institution’s strategic plans.
- • Reviewing the institution’s business and regulatory strategies to ensure ongoing suitability.
- • Delivering bespoke training.
- • Delivering bespoke research on a specific industry/regulatory development of interest.
- • Delivering staff training and capacity-building.
- • Managing and executing strategic projects on the institution’s behalf.