Borrow
25% fewer players: Banking boom set to reverse
Up to a quarter of Australia’s banks could exit the market within five years due to pressures associated with COVID-19.
25% fewer players: Banking boom set to reverse
Up to a quarter of Australia’s banks could exit the market within five years due to pressures associated with COVID-19.
According to GlobalData, the “enduring squeeze” of coronavirus on smaller players in the financial industry could result in the long-term consolidation of the marketplace.
The forecast comes after the recent announcements by a number of banks that profits have taken a hit.
According to GlobalData retail banking analyst Resham Karira, government support and cheap funding will go some way in buffering impacts on the banking sector, “but it can only mitigate the impact”.
She said the recent upswing in authorised deposit-taking institutions (ADIs), which was driven by the launch of neobanks, “appears set to reverse”.
“The next five years could see up to a quarter of ADIs exit the market via sales or mergers.”
It’s not all bad news, however: GlobalData itself has acknowledged that its revised post-COVID-19 forecasts “are not as bleak in Australia as in other countries”.
While growth figures are down across lending and mortgage categories, mortgage balances are still expected to grow across the calendar year.
Consumer loans should also stay relatively steady, with the expectation of a decline of just 0.2 per cent.
Credit card balances are expected to take a larger hit over the year – at 5.5 per cent – but GlobalData was quick to point out that this figure is on par with pre-COVID-19 forecasts.
Still looking ahead, Ms Karira pointed out that “spending, barring panic buying, will decline, and businesses will be hesitant to take on even attractive loans when they have no income”.
With retail customers and small businesses being more vulnerable, she added that banks could see a rise in the delinquency rate, resulting in higher non-performing assets.
About the author
About the author
Banking
Global banknote study reveals gender disparity: Only 7.54% depict women
A recent study by TradersBest has uncovered a significant gender disparity on the world's banknotes, with findings indicating that out of 716 individuals featured across 115 countries, only 54 are ...Read more
Banking
JPMorgan Chase leads the global banking sector in AI adoption, outpacing rivals
A recent study indicated that JPMorgan Chase has positioned itself as the leading force among financial institutions embracing artificial intelligence (AI) for enhancing customer satisfaction and ...Read more
Banking
Exact Payments acknowledged as a leading payments ISV by the Electronic Transactions Association
The Electronic Transactions Association (ETA), a prominent advocacy and trade association for the payments industry, has recognized Exact Payments as one of the Top 10 Payments Independent Software ...Read more
Banking
The future of digital banking in Australia: Trends and implications for investors
As technology continues to reshape our lives, its influence on the financial sector is particularly transformative. One sector at the epicentre of this change is banking. Read more
Banking
ANZ sued for allegedly misleading customers
The corporate regulator has commenced civil proceedings in Federal Court. Read more
Banking
Banks report $14.4bn profit amid pressure on net interest margins
Australia’s major banks have reported a significant boost to their bottom lines and returns in the first half of the 2022 financial year, signaling sector-wide resilience despite persistent pressure ...Read more
Banking
Major banks report rising profits
NAB and ANZ announced their half-year results this week. Read more
Banking
Modernisation of direct debit system suffers setback
According to the Reserve Bank (RBA), several major banks will not be able to meet the current timeline for the launch of the PayTo service. Read more
Banking
Global banknote study reveals gender disparity: Only 7.54% depict women
A recent study by TradersBest has uncovered a significant gender disparity on the world's banknotes, with findings indicating that out of 716 individuals featured across 115 countries, only 54 are ...Read more
Banking
JPMorgan Chase leads the global banking sector in AI adoption, outpacing rivals
A recent study indicated that JPMorgan Chase has positioned itself as the leading force among financial institutions embracing artificial intelligence (AI) for enhancing customer satisfaction and ...Read more
Banking
Exact Payments acknowledged as a leading payments ISV by the Electronic Transactions Association
The Electronic Transactions Association (ETA), a prominent advocacy and trade association for the payments industry, has recognized Exact Payments as one of the Top 10 Payments Independent Software ...Read more
Banking
The future of digital banking in Australia: Trends and implications for investors
As technology continues to reshape our lives, its influence on the financial sector is particularly transformative. One sector at the epicentre of this change is banking. Read more
Banking
ANZ sued for allegedly misleading customers
The corporate regulator has commenced civil proceedings in Federal Court. Read more
Banking
Banks report $14.4bn profit amid pressure on net interest margins
Australia’s major banks have reported a significant boost to their bottom lines and returns in the first half of the 2022 financial year, signaling sector-wide resilience despite persistent pressure ...Read more
Banking
Major banks report rising profits
NAB and ANZ announced their half-year results this week. Read more
Banking
Modernisation of direct debit system suffers setback
According to the Reserve Bank (RBA), several major banks will not be able to meet the current timeline for the launch of the PayTo service. Read more