Australian major banks post steady FY25 results

10 November 2025

KPMG’s Australian Major Banks Full Year 2025 Results Analysis finds that the Majors reported a combined profit after tax of $29.8 billion, which remained broadly flat with a marginal reduction of 0.5% percent compared to FY24. Return on Average Equity decreased by 500 basis points to an average of 10.7 percent.

David Heathcote, KPMG Australia’s Head of Banking & Capital Markets, commented: “FY25 results show that the Majors are navigating economic uncertainty with resilience and strategic focus. Despite a lower cash rate environment, overall the Majors have delivered solid growth in lending and deposits, whilst maintaining robust balance sheets. The sector’s continued appetite for credit and investment in technology and digital transformation reflects confidence in long-term fundamentals.”

The Majors reported growth in total assets of 5.3 percent over the last 12 months, with loan portfolios growing 5.5 percent. Business lending was a key driver of growth with portfolios increasing by 10.5 percent, while consumer lending grew by 4.8 percent. The increase in lending portfolios is driven by a lower cash rate environment, steady consumer demand, and targeted expansion strategies.

Total operating income increased to $93.9 billion, with net interest income also increasing by 5.9% to $78.8 billion compared with FY24. The increase was primarily due to higher earnings on capital and deposits replicating portfolios, partly offset by the impact of increased ongoing competition on deposit pricing and lending margins. This resulted in average Net Interest Margin (NIM) increasing by 3 basis points to 183 basis points.

The average cost to income ratio rose by 3.8 percent to 51.8 percent from FY24. This is in line with the overall increase in total operating expenses by 9.7% to $48.3 billion, driven by inflation on core expenses such as personnel.

Over the past 12 months, the total headcount increased by approximately 3.3 percent, despite recent rounds of redundancies, with personnel expenses rising by 7.8 percent to a total of $27.4 billion.

Investment spending also increased significantly by 10.7%, with technology expenses increasing by 10.5% to $9.9 billion. The Majors are accelerating their digital transformation efforts in response to growing customer demand for innovative banking solutions, with a heightened emphasis on the adoption of Generative AI technologies.

Adrian Chevalier, Consumer & Operations Partner, KPMG Australia said: “Digital transformation will shape operations functions in FY26 and beyond. Banks must reimagine their service operations to stay relevant, efficient and resilient.”

The Majors’ expected credit loss (ECL) provisions rose by 2.8 percent in FY25 to $22.3 billion, which was largely in line with the overall portfolio growth. ECL as a percentage of gross loans and advances decreased by 7 basis points from FY24 to an average of 0.64 percent, reflecting continued growth in house prices and customer resilience despite the ongoing cost-of-living pressures.

While overall credit quality remains stable, 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.

Capital and liquidity ratios across the Majors remain well above regulatory minimums, demonstrating balance sheet and liquidity strength. The average Liquidity Coverage Ratio marginally decreased to 134 percent, down by 75 basis points from FY24 and the average Common Equity Tier 1 ratio is 12.1 percent, a decrease of 20 basis points compared with FY24.

The Majors declared higher dividend payments in FY25 with an increase in the average dividend per share of 2.4 percent compared to FY24.

David Heathcote commented: “The Major banks are understandably focused on reducing their cost base to preserve profits in a highly competitive environment, where Net Interest Margins are likely to remain under pressure in the medium term, as banks continue to chase market share and protect established positions from non-big 4 competitors. Investment in technology and digitisation is happening at pace, aiming to deliver sustained efficiencies and a differentiated client experience. In the short term, this investment may impact profitability until benefits are realised.”   

Key highlights of the results are as follows:

• The Majors reported a combined profit after tax of $29.8 billion, broadly flat with a marginal reduction of 0.5% percent compared to the FY24.
• Average net interest margin for the Major Banks was 183 basis points, an increase of 3 basis points from FY24 driven by higher earnings on capital partly offset by impact of increased competition.
• The average cost to income ratio of 51.8 percent increased by 380 basis points from FY24. This movement is in line with the respective changes in total operating expenses over the same periods.
• Average provisions as a percentage of Gross Loans and Advances decreased by 7 basis points to 0.64 percent which is indicative of the continued strength of the Majors’ portfolio credit quality.
• The average Liquidity Coverage Ratio (LCR) decreased to 134 percent, down 75 basis points from FY24. The average CET1 ratio across the four banks has decreased by 20 basis points to 12.1 percent from FY24.
• Return on Average Equity decreased in FY25 compared to FY24 by 500 basis points to an average of 10.7 percent.

For more information visit our Major Banks Full Year 2025 Results Analysis.