Banks profits – Goldilocks

Damien Wood

Spectrum Asset Management

Some politicians are bleating Australian bank profits are too high. Some financial commentators are fretting saying they are heading too low. At Spectrum we see bank profits from a credit viewpoint as about just right. Often lost in the commentary is perspective. When benchmarking Australian bank profitability against government bond yields profitability margins have not changed a great deal over time. Nor are they notably higher than many other commercial banks around the developed world. Looking forward the big 4 Australian banks are set to deliver further healthy profits for at least the next year. Crucially, from a credit standpoint, the long, strong profit track record gives the banks a strong ability to raise capital – including during times of financial turmoil. This helps underpin the safety of the largest component of the Australian corporate bond market – banks.


Damien Wood
Spectrum Asset Management

Damien has around 25 years of experience in global credit markets. He has worked in Sydney, London, Hong Kong and Singapore. Much of Damien’s experience was gained from working with Credit Suisse both in Singapore and Sydney where he was Head of ...

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