ANZ, Commonwealth, National Australia Bank (NAB) and Westpac have all released half yearly results. Ernst and Young (EY) has analysed these results, showing that the sector has fallen by $1.9 billion dollars compared with results from this time last year.
EY’s chief economist, Jo Masters, believes the banking sector has some challenging times ahead.
“After 28 years of uninterrupted growth, Australia’s economy has lost considerable momentum, reflecting a softening housing market – particularly in Sydney and Melbourne – and fragile consumer confidence. The economic outlook now is more challenged than it’s been for some time and this will present some headwinds for the banking sector,” said Ms Masters.
“Credit growth is slowing alongside the housing market. While the environment remains relatively benign at present, the headwinds are mounting as low-saving households face anemic wage growth, record-high debt, increasing portions of budgets being taken up by non-discretionary spending and, now, falling housing prices,” said Ms Masters.
Royal Commission stings
The fallout from the royal commission continues with total remediation costs of $1.9 billion across the major banks for the first half of 2019.
EY’s Oceania banking and capital market leader, Tim Dring, believes the royal commission has become a disruption for the major banks.
“The financial services royal commission has disrupted the banks’ risk appetites and business flow, propelling them to reshape their processes, simplify products and address compliance obligations, as they prepare for more intensive levels of regulatory supervision and enforcement from APRA and ASIC. It has also revealed issues in their back books,” said Mr Dring.