A quarterly snapshot of the financial performance of all banks
published by Australia’s banking industry regulator provides greater
insight into the position and profits of all banks in Australia, though
most of the value in the new data may relate to foreign banks in
Australia, a group subject to comparatively little scrutiny.
The Australian Prudential Regulation Authority’s debut publication of
the Quarterly Performance Statistics for the banking sector – which
covers 50 ADIs and the year to June 2005 – sheds more light on the
foreign bank sector than it does on the closely scrutinised domestic
The new APRA series shows that the aggregate level of bank profit in
Australia produced by 50 banks reached $17.1 billion in the year to
June 2005. The big four banks accounted for $13.0 billion of this
profit, other domestic banks contributed $2.9 billion, while foreign
banks (both subsidiary and branch banks) reported profits of $1.2
Foreign subsidiary banks – of which there are ten in Australia –
recorded a return on assets of 0.8% in the year to June 2005
and also recorded a return on equity of 11.8% in 2005. This
makes foreign subsidiary banks the least profitable segment of the
banking industry in Australia (while recording higher returns than
those for deposit taking entities classified as building societies and
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This group includes HSBC, ING and Investec, and also much smaller banks such as Arab, Bank of Cyprus and Laiki.
By comparison, major banks earned a return on assets of 1% in
the year to June 2005 and a return on equity of 14.4%. Other
domestic banks in Australia earned a much higher return on assets of
1.5% in 2005 and a return on equity of 18.2%.
Foreign bank branches – of which 27 are registered in Australia –
account for $167 billion of assets at June, or 9% of all
bank assets in Australia.
The Australian Prudential Regulation Authority Quarterly Performance
Statistics for June 2005 show that foreign bank branches earned an
aggregate net profit of $382 million, equal to only 2% of the
$17 billion in net profit earned by banks in Australia in the last
This group includes all the banks that dominate the investment banking
business in Australia, including UBS, JP Morgan and Barclays.
Many foreign banks maintain registration both as branch banks and also
as foreign subsidiary banks. Banks in this category include Citibank,
HBOS and Rabobank.
Foreign branch banks appear to have paid 42% of their pre-tax
profit of $656 million in 2005 as tax, based on the APRA series, which
Foreign branch banks cannot undertake retail banking transactions,
and, as branches of foreign companies, do not have to file separate
financial statements with the local company regulator.