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FACTS ABOUT BANK PROFITS
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Sydney, November 7, 2002: The Australian Bankers’ Association (ABA) says that now the bank reporting period is coming to an end, it is important that all bank customers, shareholders and staff understand important facts about bank profits.
Some key facts are:
- Australian banks are profitable institutions, not only within Australia but also when compared to banks overseas. The banking industry does not deny this fact.
- One of the key reasons cited as to why Australia was able to withstand the Asian financial crisis was the strength, safety and security of our domestic banks.
- Australian banks source around 30% of their profits overseas. This is a remarkable export success story.
- Banks are not driving increasing profits through charging personal customers with fees on their day-to-day transaction accounts. Only 1% of bank revenue comes from these fees.
- The reason why banks are profitable is because the Australian economy is very robust and has been growing strongly for over a decade. The stronger the economy, the wealthier people become and the more they borrow for housing, other personal goods and invest to provide for their retirement.
- Banks have also increased profits through reducing their operating costs. This has been facilitated by massively increasing the supply of electronic banking facilities. Nearly 90% of transactions today are done outside the branch.
- Australian banks contribute more to Government taxation revenue than any other sector. While financial services constitutes 8% of Australia’s economy, it contributes around 30% of corporate tax revenue (by way of comparison, the mining sector contributes 6% of corporate tax revenue).
- Most importantly, however, Australian banks are critical to the returns of Australia’s superannuation funds – a $600 billion industry with around 14 million Australians with superannuation accounts. Banks make up around 25% of the Australian Stock Exchange’s capitalisation. Without strong returns from banks, people’s retirement incomes would potentially be much diminished. In addition, there are 1.5 million shareholders who invest directly in the banks.
David Bell, Chief Executive of the ABA, said: “It is very important that people understand the background and context to bank profits. Every year at the end of the banks’ reporting season, there is an enormous amount of misinformation circulating. We have provided the facts above to balance the comment and reporting.”
“In addition, banks contribute in other ways by offering low-cost accounts to eligible customers, supporting community, education and charitable programmes, and committing to best practice standards through the Code of Banking Practice.”
For further information:
Heather Wellard
ABA PR
Phone: 02 8298 0411
Mobile: 0409 830 439
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