Data from The Banker reveals that return on capital at the biggest Australian banks belies the country’s tough capital framework, reports Danielle Myles.
The head of the Australian Prudential Regulation Authority (APRA) has reaffirmed the regulator’s tough stance on bank capital over recent weeks.
APRA chairman Wayne Byres has made clear he will not be swayed by any deregulation in the US under the incoming administration of president-elect Donald Trump, and he emphasised that Basel III, which the Basel Committee is racing to finalise by the end of 2016, sets only minimum standards.
While Australia’s capital framework is among the world’s more stringent, this has not prevented the country’s biggest five lenders from building enviable profit ratios. Their return on capital (ROC) far outstrips those of similar-sized European banks.
Data collected by The Banker reveals that National Australia Bank, the country’s biggest lender by Tier 1 capital, has ROC of 18.59%. Retail and commercial-focused Commonwealth Bank and Westpac have ROCs of 30.65% and 27.98% respectively.
Even Macquarie, which houses the biggest Australian-headquartered investment bank, managed a 27.14% ROC in its last annual report.
All data sourced from www.thebankerdatabase.com
