Big four: profits up but jobs go

Profits at Australia's largest banks may have risen to a record $27.4 billion this year, but staff numbers at three of the big four are heading in the other direction.

Westpac, National Australia Bank and ANZ have cut more than 1900 full-time jobs between them in the past year, taking employee numbers at the big four to 170,200, figures from the banks' results show.

The cuts have been driven by a push to lift productivity and cut costs in response to soft revenue growth, and include moves by Westpac, NAB and ANZ to replace some local staff with lower-paid workers overseas. Commonwealth Bank, the only big lender that does not outsource work, was also the only lender to expand its employee ranks over the financial year.

National Australia Bank unleashed the deepest cuts to its workforce, cutting 1172 positions over the year to September, including 504 in the second half.

A stock exchange filing said the reductions were due to "continued focus on efficiency programs and convergence activities", alongside a restructure of its Australian business announced earlier this year.

ANZ cut 727 jobs over the year, while Westpac reduced staff numbers by 78 compared with a year earlier. The Commonwealth Bank, which reports on a June financial year and is expected to reveal first-quarter earnings of about $2 billion billion on Wednesday, expanded its staff numbers by 125 over the full year and 606 in the most recent half.

The reduction in staff is the latest evidence banks are trying to contain costs amid weak credit growth, which detracts from revenue. Despite the cuts, however, research from UBS analyst Jonathan Mott said total costs were higher than expected across the industry, detracting 1.3 per cent from earnings per share.

Although the banks have delivered big dividend increases this year, analysts said the sector may find it harder to grow at the same pace in the year ahead unless there is an economy-wide increase in credit growth. A driver of profit growth in the latest half was lower levels of provisioning, but analysts say this trend is unlikely to continue.

A report from PWC said the big four banks' bad debt expenses had fallen 15.7 per cent in the latest half, but there was a risk this could be forced up by a deterioration in the economy. "As we look forward, we see unemployment as the biggest risk to the bad debt expense," the report said.