Take it to the bank: Record low interest rates have driven down industry revenue

The National and Regional Commercial Banks industry has recorded a decline in industry revenue over the past five years. This decline has largely been due to low interest rates weighing on the industry with the cash rate falling to and remaining at a record low since August 2016. Overall, industry revenue is expected to decline at an annualised 0.3% over the five years through 2018-19, to $152.8 billion. Despite the cash rate remaining unchanged since August 2016, banks have made out-of-cycle interest rate hikes on various mortgage and business lending products. Banks have increased interest rates due to higher capital adequacy requirements, increased funding costs and tighter lending standards over the past two years...read more.

Industry Statistics & Market Size
Annual Growth 14-19
Forecast Growth 19-24

Industry Threats & Opportunities

  • Falling interest rates have been a key factor behind the industry’s declining revenue
  • Banks have increased their reliance on retail deposits as a source of funding
  • Industry revenue is projected to grow due to the greater likelihood of cash rate hikes
  • Industry Report - Industry Products Chapter

    The primary source of revenue for industry operators is interest earned on various types of loans like mortgages, business loans and personal loans. Banks also earn commissions and fees like establishment and application fees. Other sources of income include transaction and deposit account service fees.Home loansThe home loans segment consists of loans issued to owner-occupiers and investors to purchase residential property. These loans can be fixed-rate loans, variable-rate loans or a combination of the two, with durations typically ranging between 25 and 30 years. Banks generate revenue on loans from fees and commissions charged for the loan's establishment, processing and maintenance. Dep...purchase to read more.

    Additional Insights for the National and Regional Commercial Banks Industry

    IBISWorld has determined the most important Key Success Factors for the National and Regional Commercial Banks are:

  • Superior financial and debt management
  • Willingness to outsource when appropriate
  • Control of distribution arrangements
  • IBISWorld analysts also discuss how external factors such as Cash rate and Number of housing transfers in the National and Regional Commercial Banks industry impact industry performance..

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    What's in this report

    What is the National and Regional Commercial Banks Industry?

    Industry enterprises are Australian-owned and operated banks engaged in banking activities. National and regional banks primarily generate revenue through interest income on loans, incurring liabilities through accepting deposits and issuing consumer and commercial loans. Industry operators also generate revenue from investments, advances, fees and commission income.

    Industry Products
  • Home loans
  • Business loans
  • Personal lending
  • Industry Activities
  • Development bank operations
  • Savings bank operations
  • Trading bank operations
  • Table of Contents

    Industry Definition
    Main Activities
    Similar Industries
    Additional Resources
    Industry Statistics Snapshot
    Industry Structure
    Executive Summary
    Executive Summary
    Key External Drivers
  • Cash rate
  • Number of housing transfers
  • Residential property yields
  • Ratio of interest payments to disposable income
  • Total capital expenditure

  • Current Performance
  • Sources of funds
  • Greater competition
  • Chart: Revenue Growth

  • Industry Outlook
  • Challenges
  • Technology
  • Table: National and Regional Commercial Banks Industry Revenue Outlook

  • Industry Life Cycle
  • Life cycle reasons
  • Chart: Benchmarking - National and Regional Commercial Banks Industry Lifecycle vs The Economy

  • Supply Chains
    Key Buying Industries
  • Mining
  • Construction
  • Professional Services
  • Integrated Logistics
  • Consumers

  • Key Selling Industries
  • Accounting Services
  • Finance
  • Legal Services

  • Products & Services
  • Home loans
  • Business loans
  • Personal lending
  • Other
  • Chart: National and Regional Commercial Banks Industry Products and Services Segmentation

  • Demand Determinants
    Major Markets
  • Households
  • Businesses
  • Government and not-for-profit organisations
  • Chart: Major Market Segmentation for the National and Regional Commercial Banks Industry

  • International Trade
    Business Locations
    Chart: Business Locations by State
    Market Share Concentration
    Key Success Factors
    Cost Structure Benchmarks
  • Profit
  • Interest expense
  • Wages
  • Other
  • Chart: Cost Structure Benchmarking – Sector vs National and Regional Commercial Banks

  • Basis of Competition
  • Retail and commercial banking
  • Corporate and institutional banking

  • Barriers to Entry
  • Table: Barrier to Entry Checklist for the National and Regional Commercial Banks Industry

  • Industry Globalization
    Commonwealth Bank of Australia, Westpac Banking Corporation, National Australia Bank Limited, Australia and New Zealand Banking Group Limited,
  • Table: Commonwealth Bank of Australia - financial performance
  • Table: Westpac Banking Corporation - financial performance
  • Table: National Australia Bank Limited - financial performance
  • Table: Australia and New Zealand Banking Group Limited - financial performance

  • Capital Intensity
  • Chart: Level of Capital Intensity for the National and Regional Commercial Banks Industry
  • Chart: Tools of the Trade: Growth Strategies for Success

  • Technology & Systems
    Revenue Volatility
  • Chart: Volatility vs Industry Growth

  • Regulation & Policy
    Industry Assistance
    Table: Industry Data for the National and Regional Commercial Banks Industry
  • Industry Revenue (2010-2024)
  • Industry Gross Product (2010-2024)
  • Establishments (2010-2024)
  • Businesses (2010-2024)
  • Employment (2010-2024)
  • Wages (2010-2024)
  • Total Assets (2010-2024)

  • Table: Annual Percentage Change for Key Industry Data
    Table: Key Ratios for Industry Key Data
    Big Four
  • The four largest domestic banks in Australia (Commonwealth Bank, Westpac, NAB and ANZ).
  • Cash Rate
  • The rate that banks lend funds to one another overnight. It is set by the Reserve Bank of Australia.
  • Cet1 (Common Equity Tier 1)
  • Capital which primarily consists of common shares and retained earnings of a bank.
  • Four Pillars Policy
  • A legislative policy of the Federal Government that ensures the four major banks operate separately by prohibiting any mergers and acquisitions among them.
  • Neobank
  • A technology-driven bank that is established and operated digitally, without a traditional branch network.
  • Net Interest Margin
  • The difference between the interest rate a bank charges on loans issued, and that paid to customers depositing funds with the bank.
  • What Our Customers Say

    Why buy this report?

    IBISWorld’s National and Regional Commercial Banks market research report offers insightful industry analysis and research into the market at the national level. IBISWorld’s in-depth industry market research is presented in a logical and consistent format. The industry report contains key industry statistics, market size, industry trends, and growth and profit forecasts for a 5-year outlook period.

    IBISWorld industry market research reports enable you to:
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    This report on National and Regional Commercial Banks:
    • Provides Market Size information to assist with planning and strategic decisions.
    • Includes the necessary information to perform SWOT, PEST and STEER analysis.
    • Helps you understand market dynamics to give you a deeper understanding of industry competition and the supply chain.
    • Analyses key performance and operational metrics so that you can benchmark against your own business, that of your customers’ businesses, or your competitors’ businesses.
    The National and Regional Commercial Banks market research report includes:
    • Historical data and analysis for the key drivers of this industry
    • A five-year forecast of the market and noted trends
    • Detailed research and segmentation for the main products and markets
    • An assessment of the competitive landscape and market shares for major companies
    • And of course, much more

    IBISWorld reports on thousands of industries around the world. Our clients rely on our information and data to stay up-to-date on industry trends across all industries. With this IBISWorld Industry Research Report on National and Regional Commercial Banks, you can expect thoroughly researched, reliable and current information that will help you to make faster, better business decisions.

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