ADI profits rise by 30 per cent in the past year: APRA

The Australian Prudential Regulation Authority (APRA) has released the Quarterly Authorised Deposit-taking Institution (ADI) Performance publication for the September 2017 quarter.

The publication, issued Tuesday (5 December), revealed that the net profit after tax for all ADIs was $35.9 billion for the year ending 30 September 2017. This is an increase of $8.2 billion (29.5 per cent) on the year ending 30 September 2016.

Total home lending for all Australian banks increased by 5.5 per cent over the year to September, from $1.8 trillion to $1.9 trillion.

According to KPMG, the big four banks reported a cash profit after tax of $31.5 billion for the 2017 financial year, up by 6.4 per cent on 2016.

KPMG Australia’s head of banking, Ian Pollari, said that against a backdrop of subdued economic growth, slowing demand for credit, continued margin pressure and high regulatory and capital costs, the majors have been adept at managing a number of headwinds to deliver a solid result for the full year.

“Stagnant wage growth and high levels of underemployment are keeping a lid on economic growth and, in turn, demand for credit, with growth moderating to mid-single digits,” Mr Pollari said.

“Consequently, the majors will focus their efforts on cost management, simplification and investing in digital capabilities, while ensuring debt serviceability and disciplined pricing is maintained, to preserve future earnings.”

The majors recorded net interest income growth increasing by 1.7 per cent to $61.3 billion in the year, while non-interest income also increased by 3.8 per cent to $24.6 billion, mainly due to improved market conditions and one-off asset disposals.

Housing credit in the full year recorded growth of 5.3 per cent, compared to non-housing credit which only grew by 0.1 per cent.

[Related: Commission won’t ‘erode’ competitive advantage of majors]