National and Regional Commercial Banks in Australia - Industry Market Research Report

Best interest at heart: Rising interest rates are forecast to pay dividends for industry revenue

Banks are grappling with a transition from years of loose monetary policy to tighter financial conditions. Soaring inflation has prompted an RBA pivot, in the face of surging energy, housing and food prices. The RBA has aggressively hiked the cash rate since May 2022. Prior to this, banks cashed in on high residential housing prices, with low interest rates and government schemes encouraging strong mortgage uptake over the course of the pandemic. APRA also eased the interest rate buffer in 2019, before raising it in 2021. Although a subdued cash rate cut banks' interest incomes, it was more than offset by reduced interest expenses and cheap borrowing costs – ensuring healthy profit margins. Revenue is anticipated to have declined at an annualised 5.5% over the past five years – with an estimated 21.5% rebound in 2022-23 – to $127.6 billion.

Industry enterprises are Australian-owned and -operated banks engaged in banking activities. National and regional banks primarily generate revenue through interest income on consumer and commercial loans, incurring liabilities through accepting deposits. Industry operators also generate revenue from investments, advances, fees and commission income.

This report covers the scope, size, disposition and growth of the industry including the key sensitivities and success factors. Also included are five year industry forecasts, growth rates and an analysis of the industry key players and their market shares.