According to Deloitte, the first-half results highlight the challenges the banks face, with aggregate cash profits of the major banks declining by $611 million dollars, with a bottom line impact of $1.26 billion.
Deloitte stated that it has been a challenging year, with the overall results for the banks appearing largely flat, with all banks experiencing weakness in their retail business, offset by growth in business and institutional banking, as well as New Zealand operations.
Given the subdued growth and challenging outlook, the major banks have had to focus on becoming more efficient.
Collectively, the major banks’ total operating expenses were down to $18.87 billion, which is a 2.6 per cent decrease compared with March 2019 and a 4.3 per cent decrease compared with September, according to Deloitte.
Deloitte stated that the total remediation costs so far, from events including the royal commission, is $5.6 billion although it is hard to estimate the total cost, and this number could increase.
Deloitte believes the banks will face the following headwinds:
- High levels of household debt to GDP
- High levels of household debt to household disposable income
- Falling Australian house prices
- Declining housing loan
- Low consumer confidence