National and Regional Commercial Banks in Australia Industry Market Research Report Now Updated by IBISWorld

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The lower interest rate environment is putting pressure on industry growth. For this reason, industry research firm IBISWorld has updated its report on National and Regional Commercial Banks industry in Australia.

IBISWorld Market Research

IBISWorld Market Research

Industry revenue is anticipated to grow over the next five years as interest rates start climbing.

The Australian banking system has remained solid during a time when other global banking markets have faltered considerably. However, the lower interest rate environment is putting pressure on growth for players in the National and Regional Commercial Banks industry in Australia. Industry revenue is forecast to grow at an annualised 1.1% over the five years through 2014-15 to $180.9 billion. Despite sluggish growth, Australian banks remain well capitalised. However, with no further interest rate reduction expected by the Reserve Bank of Australia (RBA) in 2014-15, the industry is expected to post its first consecutive year of growth since 2007-08, with a growth rate of 4.5%. According to IBISWorld industry analyst Ryan Lin, “The industry is undergoing some structural changes.” The current low interest environment and limited potential growth in the saturated lending market have forced the major players to look elsewhere for revenue streams. Furthermore, new entrants are increasing the competition for established banks.

Although profit was substantially lower in 2009-10 as margins struggled to grow and revenue fell, the industry's overall profitability and that of individual players remained robust, in contrast with the catastrophic losses in other global markets. “Australia's banks were shielded from spiralling global funding costs by the Federal Government's wholesale funding guarantee,” says Lin. With house prices and the economy remaining relatively strong, Australian banks faced comparatively low levels of bad debts. This was in part driven by economic stimulus and continued international demand for commodities. Much of the increase in loan loss provisions was offset by slightly higher net interest margins over the first half of the five years through 2014-15. Industry profitability was further aided by declining borrowing costs. The industry displays a high level of market share concentration. Major players include Westpac Banking Corporation, Commonwealth Bank of Australia, National Australia Bank Limited, and Australia and New Zealand Banking Group Limited.

Over the next five years, industry revenue is anticipated to grow as interest rates start climbing. A stabilised economy will reinvigorate business confidence. However, competition in the National and Regional Commercial Banks industry could erode profit margins, with the four major banks expected to continue to dominate the market. The gradual contraction of the retail and manufacturing sectors is expected to impede revenue growth.

For more information, visit IBISWorld’s National and Regional Commercial Banks industry in Australia report page.

Enterprises in this industry are Australian-owned and operated banks engaged in banking activities. National and regional banks generate revenue through investments, interest income on loans, advances, fees and commission income.

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IBISWorld industry Report Key Topics

Industry Performance
Executive Summary
Key External Drivers
Current Performance
Industry Outlook
Industry Life Cycle
Products & Markets
Supply Chain
Products & Services
Major Markets
International Trade
Business Locations
Competitive Landscape
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Basis of Competition
Barriers to Entry
Industry Globalisation
Major Companies
Operating Conditions
Capital Intensity
Technology & Systems
Revenue Volatility
Regulation & Policy
Industry Assistance
Key Statistics
Industry Data
Annual Change
Key Ratios

About IBISWorld Inc.
Recognised as the nation’s most trusted independent source of industry and market research, IBISWorld offers a comprehensive database of unique information and analysis on every Australian industry. With an extensive online portfolio, valued for its depth and scope, the company equips clients with the insight necessary to make better business decisions. Headquartered in Melbourne, IBISWorld serves a range of business, professional service and government organisations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com.au or call (03) 9655 3886.

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Gavin Smith
IBISWorld
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