The big four banks will this week begin announcing profits with the ANZ (ASX: ANZ) the first to report on Tuesday.
According to the Financial Review, Australia’s big four are likely to notch up profits of more than $13 billion as a result of cost-cutting and withholding interest rate cuts late last year.
Despite ANZ’s ‘Super-Regional strategy’ pushing into parts of Asia in search of profits, the company still generates more profit for every dollar lent to domestic customers while the National Australia Bank’s (ASX: NAB) margins are the thinnest.
NAB’s aggressive low-interest home loans have sought to set it apart from rivals by bringing Australians over from the other three banks and generating more revenue. However, it hopes the profits released next Thursday will close the gap on its competitors.
Business Day reported that NAB, ANZ and Westpac (ASX: WBC) will be looking to report more than $9 billion profit in coming weeks. Domestic market lending will be the centre of attention after Commonwealth Bank’s (ASX: CBA) retail bank underpinned first-half earnings of $3.78 billion.
Of the 50 basis points in rate cuts late last year, NAB and Westpac passed on 40 and 38 to customers respectively, which will be sure to increase their cash earnings. Westpac’s first-half earnings are expected to reach $3.38 billion. In order to remain financially competitive, the NAB has been slowly increasing its home loan interest rates, closing the savings gap with other banks despite ‘breaking up’ with them in 2011.
The big four look set to report staggering profits from domestic revenues, but ANZ’s regional strategy could either put pressure on its suspected $3.13 billion in Australian revenue or help it to increase the overall performance of the bank. Conversely, CBA and Westpac will be focusing on domestic earnings from their home loans and consumer banks.
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