Business

Lobby group laments criticism over bank super profits

Kieran Salsone

THE lobby group representing Australia's banks has urged people to think twice before criticising banks for making record profits.

ANZ on Thursday recorded a record full-year cash profit of $6 billion - up 6% on the previous 12 months.

The result, which was better than most economists had forecast, came a day after the Australian Bankers' Association launched a pre-emptive defence of bank profits ahead of the reporting season.

ABA chief executive Steven Münchenberg said it was "important banks are profitable".

"Australia's banking sector is an important contributor to our country's economic growth," Mr Münchenberg said.

"In 2011, the finance and insurance industry contributed $129.8 billion to our economy - that's about 10% of GDP, according to data from the Australian Bureau of Statistics.

"Banks employed more than 211,000 people across the country; paid $15.8billion in dividends to shareholders."

Mr Münchenberg said it was important for Australia to avoid becoming complacent.

He said Australia's banks needed to remain "solid and reliable" as the effects of the global financial crisis continued to batter Europe, the United States and the United Kingdom.

"Unlike overseas, banks here did not fail, nor did they require government bail-outs.

"Australia's healthy banks continue to keep our savings safe and to make loans which keep the Australian economy moving."

With the onset of the reporting season, the ABA has produced a factsheet to outline why bank profits are "important".

"When commentating on banks' profits it's useful to look at some benchmarks. For example, when looking at return on equity, only two banks feature in the 50 most profitable listed companies in Australia," Mr Münchenberg said.

"When viewed against the size of the banks' asset bases, revenue is relatively low. Revenue is only about 6.7% of total bank assets. Profits represent just 1% of bank assets."

Read the 14-page fact sheet

Recent research showed Australia's big four banks were slow to pass on Reserve Bank cash rate cuts.

The research also showed banks failed to pass on the full value of cuts, while hiking rates in excess of any RBA decisions to raise rates.

But ANZ CEO Mike Smith defended his bank's decision not to pass on the most recent cash rate cut in full, despite the record profit.

"We have to look at our own funding costs in terms of what it costs us to raise the money to what we then pass on to people who borrow money from us," Mr Smith said.

"And in terms of how much we can pass on, in terms of an official rate cut, that will depend on how the market is performing."

None of the big four banks passed on the recent rate cut in full.

The ANZ profit came after the Commonwealth Bank announced an 11% jump in profits to $7.1 billion in August.

ANZ shareholders will be paid a dividend of $1.45 per share. The bank's share price was down slightly at the close on Thursday.

Topics:  anz, big banks, profits




Driver drunk, texting when he caused horrific collision

A vehicle was extensively damaged in a crash on the New England Hwy near the intersection of Greenmount Etonvale Rd about 7pm, July 06, 2014.. Photo: Stuart Cumming / The Chronicle

Crash left Italian tourist with face, leg fractures, permanent scars

Man tries to fight patrons, then a wooden bench

Watchhouse bench faces wrath of arrested patron

Southern Downs man to face court after noisy arrest

Police arrest man after noise complaint deteriorates

Latest deals and offers

Diva's sister on soliciting charge

FILE - In this May 14, 2016 file photo, Mariah Carey attends the 27th Annual GLAAD Media Awards, in New York. Carey will appear on the Oct. 5 episode of the Fox series, \"Empire,\" the network confirmed Monday at a TV critics bi-annual press tour. (Photo by Charles Sykes/Invision/AP, File)

Mariah Carey's sister has been arrested on charges of prostitution.

Tom Cruise private jets his gym kit around the world

Tom Cruise

Tom Cruise charters private to take his gym kit around the world

Movie behind Depp and Heard split to be released

Soon you'll be able to see the movie that ended the marriage

Bindi's boyfriend helps release huge croc

Chandler (far right) helped the jump team.

Chandler Powell helps catch Duncan the croc

Mick Jagger to pay £2.5m to the woman carrying his baby

Mick Jagger is reportedly paying millions to pregnant ballerina

Navy man Keller ready to marry a perfect stranger

Former Navy engineer Keller is a participant in season three of Married At First Sight.

Tattoos are just the surface of Married At First Sight groom.

REVEALED: Pat Rafter's $18m Coast house on the market

Check out the photos of the Coast's most expensive property for sale

The "correction we had to have" in Gladstone's rentals

UPWARD MARCH: The rental vacancy rate in Gladstone has improved for the first time in more than a year, providing a confidence boost in the market.

Vacancy rates improve with signs that things are getting betterF

ISLAND FOR SALE: Cheap Fraser Coast island drops price again

Suna Island in the Great Sandy Strait will be auctioned by Ray White Hervey Bay on Saturday morning.

This is the cheapest island you will find for sale in Australia

How a family home can fit on a 250sq m block

This is what you can build on 250m2.

Here's the floor plan of a home built on 250sq m

$100m plan for Curtis Island 'world class' luxury resort

$100 million resort: Top views at Turtle Street at Curtis Island.

"At the moment we think it meets all the town planning approvals.”

Noosa mayor on "red alert" over planning court decision

Mayor Tony Wellington hands down his first budget.

Mayor upset at lack of say about look and feel of Noosa