The big four banks made more than $27 billion in profits in the past year, making Australia’s banking sector one of the world’s most successful.
The profit growth came despite low demand for loans from businesses, and strong competition for deposits from cautious consumers, analysts said.
The main factors driving profit growth were lower costs from unpaid debts and stronger performances from wealth management and institutional banking activities.
Efficiency also improved, but costs rose slightly due to investments in new technology and staff expenses, PwC Australia banking analyst Stuart Scoular said.
Higher staff expenses came despite three of the banks reducing employee numbers, most notably NAB where almost 1,200 positions were cut.
Commonwealth Bank, Westpac, ANZ and National Australia Bank all made record annual cash profits in 2012/13, taking their combined profits to $27.4 billion, up 9.5 per cent from the previous year.
“It’s apparent that on many measures the Australian banking sector is among one of the world’s most successful,” PwC Australia banking analyst Stuart Scoular said.
“They seem well placed to maintain that mantle for a good while yet, provided of course that Australia can maintain its enviable record of economic growth.”
The chief executives of all four banks remain cautious about the coming year, but said recent growth in house prices and improving business confidence were good signs.
“I’m encouraged by signs of growing confidence, which we expect to lead to increased lending activity, in particular in New South Wales and the gradual increase in domestic credit growth,” Westpac boss Gail Kelly said on Monday.
“We are well positioned to benefit from the pick up as confidence returns, all of our divisions and brands have good momentum heading into 2014.”