On 8 May 2025, KPMG released its analysis of Australia’s big four banks’ half year financial results.
To explain what these results mean, KPMG provides insights and future predictions on the state and direction of the four major banks and the banking sector in Australia more broadly.
The Majors reported a combined profit after tax of $15.5 billion, up 3.5% compared to the first half of 2024, and 4.3% from the second half of FY24.
Interactive banking results dashboard
Compare and analyse the results of the four major banks’ historical data starting from 2013, including income, costs, liquidity, asset quality and returns. Also select to view half year or full year reporting metrics.
Results summary
Income
The combined Net Profit after tax of $15.5 billion, is up 3.5% compared to the first half of 2024, and 4.3% from the second half of FY24.
Operating income has increased by 4.3% from 1H24 to $46.3 billion. Additionally total net interest income increased by 4.8% to $38.6 billion compared with 1H24 and remained broadly flat relative to 2H24.
The Majors reported growth in total assets of 3.5% over the last six months. Gross Loans and Advances increased by 7.1% from 1H24 and 2.4% from 2H24 with all four banks reporting increases.
The Majors’ average Net Interest Margin (NIM) increased by 2 basis points to 181 basis points against 1H24. However, due to persistent competition the NIM decreased by 1 basis point in the last six months when compared with 2H24.
Net fee and commission income, which makes up 9.4% of the Majors’ total income, decreased by 1.3% from 1H24 and by 2.4% compared with 2H24, primarily driven by higher customer remediation.
Costs
Total operating expenses of $22.7 billion have increased by 6.2% compared with 1H24 and by 2.9% compared with 2H24. These costs are primarily driven by personnel and technology expenses.
Total headcount has increased by approximately 3.4% compared with 1H24 and by 1.9% compared with 2H24. Inflationary pressure has further contributed to the rise in labour costs, increasing by 6.2% compared with 1H24 and by 3.5% compared with 2H24.
While overall investment spend increased significantly by 11.8% compared with 1H24, it decreased by 8.9% compared with 2H24, as a result of seasonality in spending within the year depending on each of the Majors’ respective investment strategies. Technology expenses have increased by 10.7% compared with 1H24 and by 3.6% compared with 2H24. The Majors cited accelerating digital transformation initiatives in response to customer demand for innovative banking solutions and an increased focus on gen AI as key drivers.
As a result, the average cost to income ratio increased by 89 basis points from 1H24 to 49.2%, although it has decreased by 9 basis points compared to 2H24.
Liquidity
The average Liquidity Coverage Ratio (LCR) decreased to 133.3%, down by 2% and 1.25% from 1H24 and 2H24 respectively. The average CET1 ratio across the Majors is 12.1%, a decrease of 56 basis points and 27 basis points compared with 1H24 and 2H24 respectively.
While the average leverage ratio decreased by 37 and 15 basis points from 1H24 and 2H24 respectively, to an average of 4.88% in 1H25, it is still well above the 3.5% APRA minimum requirement across the Majors demonstrating balance sheet and liquidity strength.
Liquidity coverage ratio
Asset quality
The Majors’ expected credit loss (ECL) provisions increased by 2.8% and 1.3% compared to 1H24 and 2H24 respectively, to $22.0 billion. However, ECL as a percentage of gross loans and advances reduced by 3 and 1 basis points from 1H24 and 2H24 respectively, to an average of 0.65%.
Reflecting on the stable credit performance, the Majors cited continued growth in house prices and customer resilience despite the ongoing cost-of-living pressures. Overall stability in credit quality combined with a more optimistic economic outlook also contributed to a continuing reduction in the share of non-performing loans across the Majors’ portfolios.
ECL as a percentage of Gross Loans and Advances (GLA)
Shareholder returns
Total Return on Average Equity increased in 1H25 compared with both 1H24 and 2H24 by 23 and 32 basis points respectively, to an average of 11.18%.
The Majors declared dividends in 1HY25 of $469 million, with an increase in the average dividend per share of 2.6% compared to 1H24.
The Majors carried out $1.22 billion in share buybacks in 1HY25, which was lower than 1H24.
Return on equity
Core banking modernisation: simplifying legacy systems for future value
Digital transformation across the big four major banks continues to reshape the landscape, highlighting the crucial interplay between technological innovation, customer-centric strategies, and embedding security and trust.
In FY24, technology spend increased by 15.2% to $8.9 billion, as reported across the Majors. Banks continue to accelerate efforts to assess and adopt emerging technologies, such as AI agents and machine learning. These technologies are streamlining operations and reducing costs, allowing banks to offer personalised and convenient services to their customers.
Emerging technology aside, focus continues to shift towards core platform simplification, modernisation and dealing with legacy technology debt. Insights from the KPMG Global Tech Report 2024 - Financial Services Insights highlight 58% of executives admit that flaws in their foundational enterprise IT systems disrupt business-as-usual on a weekly basis. The big four major banks are increasingly looking to improve resilience and uplift business continuity.
And, to fully realise the potential of technology investments, value must remain on the table. This means an ongoing focus on the planning, sequencing and coordination 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 digital banking landscape enables us to navigate complex 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
AI agents – coming soon to a bank near you
AI agents (agentic AI) are set to accelerate transformation in the banking sector by enabling hyper-personalised, efficient and seamless customer experiences while driving new levels of operational efficiency. These agents shift AI from knowledge retrieval to decision-making and process execution, with higher levels of autonomy and intelligence. Our recent global research reveals that 84% of banking executives are already exploring agentic AI solutions.
Banks are continuing to have high expectations for AI, with 80% believing that those who embrace AI will have a competitive advantage, and 62% expecting a moderate to very high ROI from AI investments. There is growing demand to prove these benefits with 70% of executives facing shareholder pressure to show immediate ROI from their AI investments.
Banks should prepare now for agentic AI and may need to upgrade legacy systems or consider low-code options to optimise their AI progress. New data platforms, products, and governance may be needed to help build confidence in the quality of data and to improve outcomes from the use of AI. Future talent needs should be considered to upskill current teams while identifying future skills sources, including partnering or co-investing with startups or tech companies.
Banks are now investing in AI agents to autonomously perform complex tasks and deliver a real return on investment, but no one has exhausted the potential around AI yet.
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.
KymChat, KPMG’s trusted proprietary secure version of ChatGPT, is highly successful in analysing 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 and scams. We bring a holistic proposition combined with our technology, data and analytics capabilities to solve financial crime problems end to end. Our financial crime specialists can help banks evolve their financial crime risk management 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 risk.
The criminal threat is becoming more challenging and complex. There is large-scale technology disruption, digital payments, fraud and scams activity – and financial institutions need to evolve their approach to prevent and detect 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 Citibank’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
Interactive banking results dashboard
Compare and analyse the results of the four major banks’ historical data starting from 2013, 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
To find out more about the Australian big four major banks’ 2025 results summary or learn more about Australia’s banking industry, contact KPMG’s banking specialists.
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FAQs
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Who are the big four Australian banks? Recognised as Australia’s big four major banks, these are: National Australia Bank (NAB), Commonwealth Bank of Australia (CBA), Australia and New Zealand Banking Group (ANZ) and Westpac (WBC). These banks have historically dominated the Australian banking landscape in terms of market share, revenue, and total assets.
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Where does the data for the major Australian banks 2025 results come from? This data is drawn from the big four Australian banks’ financial statements and disclosures, augmented with financial statistics from the Australian Prudential Regulation Authority (APRA). Each year, the big four Australian banks release their half year reporting around May, and full year reporting around October, with some variation between the banks’ timings.
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What data from the big four banks does the KPMG dashboard compare? 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.
Use the dashboard to compare and analyse the results of the big four banks across 10 years of historical data including income, cost, liquidity, asset quality and results. The dashboard allows you to compare historical data from half year results in addition to full year results.
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What are the net interest margins of the big four Australian banks? Net interest margins (NIMs) are crucial metrics for assessing the performance of the big four Australian banks. NIMs measure the difference between the interest income generated by the banks and the interest paid to their depositors. KPMG analyses the NIMs of the four major banks to provide insights into their financial performance.
Sign up to receive KPMG’s analysis of the big four Australian banks’ half year financial results for 2025, including NIM results.
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Why is the cost to income ratio important for assessing the big four banks’ performance? The cost to income ratio measures the big four major banks’ efficiency in managing operating expenses relative to income. A lower ratio indicates higher efficiency and better cost management, which directly impacts profitability.