Big Four Australian Banks Continue To Be Highly Profitable Despite Financial Crisis

Post by NeilMc on September 28, 2009 · Under Australian Economy, Business News, Equities, Mergers & Acquistions, banking · Comment

Australian banks continue to be some of the most highly profitable financial institutions globally, ending the year relative to their peers on a high note, with three of the Big Four generating cash profits of $11 billion between them.

Westpac, NAB and ANZ are expected to deliver more than $15.8 billion between them in 2009, with CBA being the first to report full year profits, which came in at $4.3 billion for the year ending June 30th.

September 30th marks the end of the financial year for the other three, and bumper profits highlight just how much they have extended their dominance over the domestic Australian banking market.

Westpac, which merged with St George last year, is expected to deliver a staggering group profit of $4.5 billion banking analysts.

Despite the extremely positive profit, the result can be interpreted in two ways. Despite Westpac having increased its year on year profit by $800 million, had St George reported its results as an independent entity, its previous year’s profit was $1.3 billion.

The reason for the disparity is the same for all four majors, who have seen their year on year profits decline as a result of rising bad debt provisions.

When Westpac chief executive Gail Kelly does release full year results on November 4th, it will confirm its ascent to the position of Australia’s most profitable bank. The previous holder CBA will remain Australia’s largest lender as measured by assets and market capitalisation.

CBA shares which have rallied along with equities globally, and are at their highest level since January 2008, now values the group, which includes Bankwest at nearly $78 billion. Westpac is just behind at $77 billion.

NAB and ANZ are valued at $63 billion and $59 billion respectively, and both lenders are expected to also deliver robust results despite rising credit impairment charges and slower economic conditions.

Their expected cash earnings results of $3.7 billion and $3.2 billion will be on a par with the previous year and will be considered a good outcome given their bad-debt write-downs.

Big Four banking stocks have rallied more than 14 per cent during the last month and recovered more than a third during the quarter.

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