Australia’s major banks remain resilient despite economic uncertainty in the full financial year results. The Australian major banks reported a combined profit after tax of $29.9 billion, down 5.7 percent compared to FY23. Return on Average Equity also decreased by 80 basis points to an average of 10.9%.
KPMG’s team of experts provides full analysis following the four major banks’ full year results, along with insights on a range of topics that are key challenges or opportunities for banks to continue to evolve or invest in.
Interactive banking results dashboard
Compare and analyse the results of the four major banks across 10 years of historical data including income, costs, liquidity, asset quality and returns. Also select to view half year or full year reporting metrics.
Optimising banking value through digital innovation
Digital transformation across the major banks continues to reshape the landscape, emphasising the crucial interplay between technological innovation, customer-centric strategies, and embedding security and trust.
In FY24, technology spend increased by 15.2 percent to $8.9 billion, as reported across the majors. Banks are accelerating digital transformation initiatives.
The focus is shifting to digital banking and core platform modernisation. Banks are also accelerating their efforts to assess and adopt emerging technologies, such as artificial intelligence and machine learning, which are enabled by a robust data backbone. These technologies enable streamlined operations and reduced costs, enabling banks to offer personalised and convenient services to their customers.
Simultaneously, insights from the KPMG Global Tech survey highlight that 81% of CIOs worry about keeping up with the pace of change.
And, to fully realise the potential of technology investments, value must remain on the table. This requires ongoing focus on the planning, sequencing and orchestration of broader business integration and change across the value chain.
KPMG Connected Enterprise for digital innovation
KPMG is a leading partner for digital transformation in the banking sector, merging wide-ranging global expertise with in-depth banking industry knowledge. Through our leading Connected Enterprise solutions and extensive market insights, we craft tailored business and technology solutions that not only drive sustainable growth and foster innovation but also significantly enhance the customer and employee experience.
KPMG’s nuanced understanding of the intricate digital banking landscape enables us to adeptly navigate the complexities of core platform modernisation, especially within the stringent regulatory framework of the Australian banking sector. Regardless of your organisation's size or technological platform, we deliver customised strategies and comprehensive technology solutions from inception to implementation.
We are at a critical digital juncture. The ability to relentlessly orchestrate multiple, complex, concurrent changes whilst harnessing new technology will increasingly differentiate banks. And customers stand to be the winners.
KPMG Australia
Gen AI hype changing the banking game
Banks have always been quick to embrace new technologies like AI, demonstrated recently through customer-facing AI agents, data enablement, compliance, software code generation and more.
Bank technology leaders suggest they’re inundated with requests for gen AI support. Yet finding AI talent is a challenge in a time where only 16% of organisations have a workforce highly equipped for gen AI, and 61% are actively hiring new talent to support their gen AI initiatives. Learn more about how banks are exploring gen AI.
As AI use scales, leaders are focusing on risk management and mitigation. Evolving expectations in Australia, like the 2024 Voluntary AI Safety Standard and emerging global expectations (e.g. the EU AI Act) will require banks to develop and deploy Trusted and responsible AI risk governance and management practices as part of their operating and delivery models.
Why KPMG for Trusted AI
We put people, trust and governance at the core of AI – helping organisations accelerate value with confidence, using our Trusted AI framework. We are experienced in helping banks with their AI transformations, by combining industry knowledge and actionable insights with leading technology alliances, robust frameworks and AI accelerators.
We proudly lead the charge in AI excellence as the first firm globally to receive ISO 42001 certification by BSI for AI Management Systems.
Gen AI is not a fad. Leading banks have moved from exploration and pilot to production and payback. As benefits shift from cost focused to revenue, growth and risk mitigation, leaders may need to rethink how they plan and measure their investments.
KPMG Australia
Riding the regulatory wave in banking
Australia’s banking environment remains inundated by new regulation and higher expectations of regulators. This is especially true for Operational Resilience (CPS 230) – dealing with customer hardship in our current economic environment, preparing for meaningful extensions to the Privacy Act and increasing cyber defences. Read our detailed paper and thoughts about the final CPS 230 rule.
Yet not all themes in the regulatory and risk landscape are negative. Thoughtful and outcome-focused approaches to new or enhanced rules can yield genuine benefits to banks – some are even positioning it as a competitive advantage. For example, a more resilient organisation helps retain customers, protect reputational risk and preserve shareholder value.
Exciting developments in AI are also leading to genuine and tested examples of banks using sophisticated technology for identifying and improving their controls for managing regulatory obligations and risks.
Why KPMG for risk and regulation
KPMG’s Trusted Enterprise approach delivers industry-leading risk specialists who understand how risk management needs to be embedded in financial services. Our deep experience in banking allows us to provide proven and tailored solutions for your organisation’s unique needs.
Complementing this, KPMG is a leader in using Generative AI for accelerating analysis and enhancing risk management, controls and obligations. Our AI driven compliance approach provides sophisticated risk analysis that prioritises focus areas, provides uplift recommendations and helps identify duplication and automation opportunities.
KPMG KymChat, our trusted proprietary secure version of ChatGPT, is highly successful in consuming policies and frameworks to support professionals across the organisation efficiently and effectively.
Any banking organisation that isn’t leveraging new regulation to achieve positive and real outcomes for the organisation and its customers is potentially wasting an opportunity to garner value from the material costs of compliance.
KPMG Australia
Financial crime: an increasingly sophisticated risk for banking
Financial crime is one of the most significant risks faced by financial institutions and global economies. It is becoming increasingly sophisticated, and the role financial institutions play has become vital to preventing, detecting, and deterring this criminal activity.
A major challenge for financial institutions is finding a way to balance the increasing regulation and its associated costs, while delivering better customer experience, reduced costs and technology innovation. It’s a complex environment to operate in, but getting financial crime compliance wrong is not an option.
Financial institutions must evolve their current methods and legacy technology to tackle the new era of financial crime. And it’s integral to get the right support for more effective, efficient and dynamic onboarding, detection and prevention.
Why KPMG for financial crime prevention
We can support financial organisations in this rapidly evolving threat landscape with our expertise in financial crime, fraud, scams and market abuse alongside technology and data and analytics capabilities. We incorporate tools such as machine learning and AI to keep your organisation ahead of threats. Our tools provide the ability to streamline the operational process and support more effective transaction monitoring detection and prevention. Additionally our Customer Due Diligence policy lineage tool provides the ability for our clients to progress the journey to Perpetual Know Your Customer (PKYC). We have delivered PKYC from concept to implementation and operationalisation at large global banks. Our forensic specialists can help banks reduce reputational risk and commercial loss through financial crime using our KPMG Trusted Enterprise approach.
The power of KPMG’s global network gives you access to financial crime fighters, data scientists, CX designers and sector specialists who understand your domain and how you operate. Our team holds decades of cumulative experience working on financial crime compliance. Together with our third-party solution providers, we deliver effective outcomes for you and your clients.
The criminal threat is becoming more challenging and complex, and AI has accelerated its sophistication. There is large-scale technology disruption, digital payments, fraud and scams activity – and financial services institutions need to fundamentally change how they approach detection and prevention of financial crime. This evolution needs to occur now to ensure banks remain defensible against financial crime, fraud and scams.
KPMG Australia
Evolving cyber security for banking
Realising the value of significant security investment often means major banks must continuously demonstrate how they’re optimising their solutions, services and teams to reduce risk in an evolving threat landscape.
Despite cyber security being a priority for financial institutions, the current economic climate is placing increasing cost pressure on CISO budgets. In fact, many are seeing flat budgets, with some of that spend diverted to innovation, particularly AI and automation solutions. CISOs must be strategic with their investment decisions to proactively predict and mitigate risks.
The rapid adoption of gen AI and machine learning also presents a new hurdle. A business with a security-conscious mindset, where secure-by-design principles are embedded into the fabric of the organisation, is no longer optional – it’s essential.
KPMG Trusted Enterprise: cyber support
With our deep cyber security capabilities and solutions, round-the-clock monitoring, and technical expertise, KPMG helps banks design, build, and implement AI, machine learning and automation solutions to optimise security, reduce costs, and navigate the evolving threat landscape.
Our specialists provide strategic vision and technical expertise to proactively mitigate risk and build trust in a volatile digital world.
Staying on top of the evolving threat landscape, optimising security investment, embracing the efficiency gains of automation, AI and machine learning and streamlining operating models, within an environment of increased downward cost pressure are competing challenges for the banking CISO of today.
KPMG Australia
Strategic transactions unlocking value for banking
True value creation for banking lies in business model transformation, helping institutions adapt to rapidly changing market dynamics, evolving customer expectations, and emerging technologies. A good example of this is NAB’s acquisition of Citi Bank’s Australian retail assets and 86400.
Digital transformations are changing the industry, financial institution structures, teams and how they engage with and deliver services and products to customers.
Strategic M&A can act as a catalyst for transformation, offering financial institutions the chance to quickly enhance capabilities, expand specific business segments, consolidate market positions and leverage the associated costs of transformation through inorganic growth opportunities.
Besides systemic changes from technology, the market faces higher competition with lower deal volumes and non-traditional entrants. Established approaches to M&A, strategy, and diligence are no longer sufficient in today’s environment.
Why KPMG for strategic transactions
KPMG’s Diligence+ methodology offers significantly deeper insights to transactions. Our financial services specialists look beyond simple financials, instead using advanced tools and techniques such as data analytics and machine learning to analyse and derive insights from a wide range of financial and non-financial information. This helps them to understand the full picture of a company’s financial and operational performance, potential transaction risks and opportunities embedded within a deal, enabling clients to make decisions with conviction.
Strategic transactions in banking remain a powerful lever for achieving deeper transformation … but equally reshape and introduce new dynamics that need to be considered during execution of the deal.
KPMG Australia
Results summary
Income
Total operating income remained flat at $90.0 billion, however total net interest income decreased by 0.5 percent compared with FY23 to $74.4 billion. The Majors cited strong competition from both existing and new competitors, including non-bank lenders, as a key driver of the continued compression in margins. This resulted in average Net Interest Margin (NIM) decreasing by 7 basis points to 180 basis points.
The Majors reported growth in total assets of 4.4 percent over the last 12 months, with loan portfolios growing 5.7 percent. Business lending was a key driver of growth with portfolios increasing by 5.3 percent, while consumer lending grew by 2.1 percent.
Fees and commission income, which makes up 9.9% of the Majors’ total income, remained consistent with FY23, primarily driven by higher institutional lending fees relating to underwriting activity and portfolio growth, offset by lower merchant fee income.
Costs
The average cost to income ratio increased by 3.3% to 49.2% from FY23. This is in line with the overall increase in total operating expenses by 5.3% to $44.0 billion, driven by inflation on core expenses such as personnel, offset by a decrease in investment spend.
Over the past 12 months, the total headcount increased by approximately 0.8% and personnel expenses increased by 3.5% to a total of $25.4 billion.
While overall investment spend decreased by 0.7%, which reflected the completion of several large programs, technology expenses have increased significantly by 15.2% to $8.9 billion. The Majors are accelerating digital transformation initiatives in response to customer demand for innovative banking solutions with an increased focused on Generative AI.
Liquidity
Capital and liquidity ratios remain well above regulatory minimums, demonstrating balance sheet and liquidity strength. The average Liquidity Coverage Ratio (LCR) increased to 134.5%, up by 0.2 percentage points from FY23. The average Common Equity Tier 1 (CET1) is 12.3%, a decrease of 19 basis points compared with FY23.
While the average leverage ratio decreased by 28 basis points from FY23 to 5.03%, it is still well above the 3.5% APRA minimum requirement across the Majors.
Liquidity coverage ratio
Asset quality
The Majors’ expected credit loss (ECL) provisions grew by 2.8% in FY24 to $21.5 billion, which was largely in line with the overall portfolio growth. ECL as a percentage of gross loans and advances decreased by 2 basis points from FY23 to an average of 0.65 percent. The Majors cited continued growth in house prices and customer resilience despite the ongoing cost-of-living pressures.
The ‘mortgage cliff’ appears to have passed without a significant decline in credit quality. Approximately 92% of the Majors’ housing portfolio is in variable loans at the end of FY24, compared with 66% at the end of FY22.
Despite overall stability in credit quality, non-performing loans represent an increasing share of the portfolio across the Majors. Additionally, the Majors’ stressed credit exposures in business lending are primarily concentrated in the sectors of construction and agriculture.
ECL as a percentage of Gross Loans and Advances (GLA)
Shareholder returns
Return on Average Equity decreased in FY24 compared to FY23 by 80 basis points to an average of 10.9%.
The Majors declared higher dividends in FY24 with an increase in the average dividend per share of 1.8% compared to FY23. The Majors carried out $5.1 billion in share buybacks in FY24, which in total is higher than FY23. The Majors further announced a total of $3.9 billion share buybacks to be undertaken in the future.
Return on equity
Interactive banking results dashboard
Compare and analyse the results of the four major banks across 10 years of data including income, costs, liquidity, asset quality and returns. Also select to view half year or full year reporting metrics.
This historical data is drawn from major bank financial statements and disclosures, augmented with APRA financial statistics.
Connect with KPMG’s banking specialists
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FAQs
Who are the 4 major banks in Australia?
Four major banks dominate the Australian banking system. Recognised as Australia’s biggest banks, these are: National Australia Bank (NAB), Commonwealth Bank of Australia (CBA), Australia and New Zealand Banking Group (ANZ) and Westpac (WBC). Also known as the top 4 banks, these big banks have historically led the Australian banking sector in terms of market share, revenue and total assets.
Where does the data for the big 4 Australian banks 2024 results come from?
The data is drawn from the big 4 Australian banks’ financial statements and disclosures, augmented with financial statistics from the Australian Prudential Regulation Authority (APRA).
Each year, the big 4 Australian banks release their half year reporting in May (CBA in February), and full year reporting in November (CBA in August).
What can expect to see in the KPMG banking dashboard?
KPMG’s Australian banking dashboard is a tool designed to facilitate the comparison and analysis of the financial performance of Australia’s four major banks.
Using the dashboard, you can look at the results of the big 4 banks across 10 years of historical data including income, cost, liquidity, asset quality and results. The Australian banking dashboard now features the big 4 banks’ full year and half year historical data.