Resilient results amid rising uncertainty

5 May 2026

• The Majors reported a combined profit after tax of $15.2 billion, a decrease of 2.1 percent compared to the prior half.
• Average net interest margin  for the Major Banks was 178 basis points, remained relatively stable compared to the prior half.
• The average cost to income ratio of 52.1 percent rising by 4.6% from 1H25. 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 marginally by 1 basis points to 0.6 percent which is indicative of the continued strength of the Majors’ portfolio credit quality.
• The average Liquidity Coverage Ratio (LCR) decreased to 132 percent, down 125 basis points from 1H25. The average CET1 ratio across the four banks has increased by 13 basis points to 12.1 percent from 1H25.
• Return on Average Equity decreased compared to 1H25 by 54 basis points to an average of 10.7 percent.
  

KPMG’s Australian Major Banks Half Year 2026 Results Analysis finds that the Majors reported a combined profit after tax of $15.2 billion, down 2.1% on 1H25. Return on average equity decreased by 54 basis points to an average of 10.7 percent.

David Heathcote, KPMG Australia’s Head of Banking & Capital Markets, commented: “While the headline results remain resilient, the Majors are positioning for a more challenging period ahead. The focus is increasingly on strengthening balance sheets and staying close to customers as inflation and interest rate pressures continue to work through the economy.”

The Majors reported growth in total assets of 4.8 percent compared to 1H25, with loan portfolios growing 5.4 percent. Business lending remained a key driver of growth with portfolios increasing by 9.2 percent while consumer lending also expanded by 4.7 percent. This growth reflects continued credit demand and strong customer activity. The expansion in lending portfolios was accompanied by solid deposit inflows and robust liquidity holdings as the majors maintained a disciplined approach to balance sheet growth in a competitive environment marked by heightened uncertainty.

Total operating income increased to $48.5 billion, with net interest income also increasing by 4.9% to $40.5 billion compared to 1H25. The increase was primarily driven by volume growth in lending and deposits, as well as higher earnings on capital and replicating portfolios, partly offset by continued competitive pressure on lending margins and the impact of higher liquidity holdings. This resulted in average Net Interest Margin (NIM) remaining broadly stable at 178 basis points.

The average cost to income ratio rose by 4.6% to 52.1 percent from 1H25. This is in line with the overall increase in total operating expenses, driven by inflation on core expenses such as personnel.

Investment spending also increased by 4.7%, with technology expenses continuing to rise. The Majors are maintaining a strong focus on digital transformation, data capabilities and platform modernisation to enhance customer experience and operational efficiencies. This includes continued investment in areas such as AI, fraud prevention and cyber security.

Brad Daffy, Powered Data & AI Partner, KPMG Australia said: “As banks seek access to AI talent with practical experience, those who jumped in and learned the skills quite early have become very valuable in the market, with productivity benefits expected to be realised in future periods.”

The Majors’ expected credit loss (ECL) provisions increased by 3.6 percent in 1H26 to $22.8 billion, broadly in line with portfolio growth and a more cautious forward outlook. ECL as a percentage of gross loans and advances remained stable at 0.6 percent, reflecting continued resilience in credit quality, supported by strong employment levels and borrower repayment buffers.

Capital and liquidity ratios across the Majors remain well above regulatory minimums, demonstrating continued balance sheet strength. The average Liquidity Coverage Ratio remained robust at 132 percent, while the average Common Equity Tier 1 ratio was 12.2 percent, reflecting disciplined capital management. Movements over the period were modest, with ratios remaining comfortably within target ranges as banks balance growth, capital returns and a focus on maintaining resilience.

The Majors declared higher dividend payments in 1H26, with average dividends per share increasing by 2.3 percent compared to the prior half.

David Heathcote commented: “The half year results reinforce the strength of the sector, but also signal a shift toward an unfavourable outlook. The sector is balancing growth and returns while navigating a more complex environment shaped by a slowing economy, together with the threat of further interest rate rises and evolving geopolitical risks impacting both consumer and business confidence.”