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The outlook for investor favourites in Australia

NAB CBA Westpac ANZ

The big four banks’ first-half profits were a cause of concern for investors, and Deloitte has since released its outlook for the portfolio staples.

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.

Growth

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.

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Efficiency

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.

Remediation costs

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.

Headwinds

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
The outlook for investor favourites in Australia
NAB CBA Westpac ANZ
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