Despite a sluggish economy, wage stagnation and a visibly helpless government, Australians are poised to have a good year financially, thanks to a dirty, not-so-little secret about our banks: while we hate them, they make us wealthy. And 2019 is so far turning out to be an unexpectedly strong year for them.
The Hayne banking royal commission drove bank share prices lower last year. And the recommendations from Hayne were going to make life hard for the banks this year and going forward -- or so we were told. They'd already started setting aside and paying out what could end up being $6-7 billion (remember when it was $600-700 million?) in customer remediation costs, interest and other charges. These costs have forced dividend cuts and knocked share prices. With falling house prices, narrowing interest margins and tougher rules on their most profitable activity -- mortgage lending -- a lot of commentators saw only gloom and doom ahead for the big banks.