Big four: profits up but jobs go
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.
Frequently Asked Questions about this Article…
The big four banks in Australia, including Westpac, National Australia Bank, and ANZ, are cutting jobs to boost productivity and reduce costs due to soft revenue growth. This includes outsourcing some positions to lower-paid workers overseas.
The big four banks in Australia, including Westpac, National Australia Bank, and ANZ, are cutting jobs to boost productivity and reduce costs in response to soft revenue growth. This includes outsourcing some jobs to lower-paid workers overseas.
The Commonwealth Bank is the only one among the big four banks in Australia that has increased its workforce, adding 125 employees over the full year and 606 in the most recent half.
The Commonwealth Bank is the only one among the big four banks in Australia that has increased its workforce, adding 125 employees over the financial year and 606 in the most recent half.
National Australia Bank has made significant workforce reductions, cutting 1,172 positions over the year, including 504 in the second half, as part of its efficiency programs and business restructuring.
National Australia Bank has made the deepest cuts to its workforce, reducing 1,172 positions over the year, including 504 in the second half, as part of its efficiency programs and business restructuring.
Despite job cuts, total costs across the banking industry were higher than expected, detracting 1.3% from earnings per share, according to research from UBS analyst Jonathan Mott.
Weak credit growth has led Australian banks to focus on cost containment, which has resulted in job cuts. Despite these efforts, total costs have been higher than expected, impacting earnings per share.
A key driver of profit growth for the big four banks was lower levels of provisioning. However, analysts believe this trend may not continue in the future.
While Australian banks have seen profit growth due to lower provisioning levels, analysts suggest that this trend may not continue unless there is an economy-wide increase in credit growth.
According to a report from PWC, the biggest risk to the banks' bad debt expenses is unemployment, which could lead to an increase in bad debt expenses if the economy deteriorates.
According to a report from PWC, the biggest risk to the bad debt expenses of Australian banks is unemployment, which could lead to an increase in bad debt expenses if the economy deteriorates.
The big four banks have seen a 15.7% decrease in bad debt expenses in the latest half, but there is a risk that these expenses could rise if the economy worsens.
The big four banks have seen a 15.7% decrease in bad debt expenses in the latest half, but there is a risk that these expenses could rise if the economic situation worsens.
Analysts suggest that the big four banks may struggle to maintain their current growth pace unless there is an economy-wide increase in credit growth. Additionally, the trend of lower provisioning levels is unlikely to continue.
Australian banks are focusing on efficiency programs, cost-cutting, and restructuring to manage soft revenue growth and weak credit growth, while also dealing with higher-than-expected total costs.
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