Profits of Big Four to exceed $13 billion this earnings season

Alison Banney 1 May 2017

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Over the next two weeks CBA, ANZ, NAB and Westpac will each report their earnings.

It will be a busy two weeks for the Big Four banks as each reveals its interim earnings, with analysts predicting combined profits of between $13 and $15 billion.

ANZ will kick-start the half-year bank reporting season tomorrow on Tuesday 2 May, revealing its profits for the six month period to 31 March. The Australian reports analysts are predicting the bank to report a cash profit of over $3.5 billion.

NAB is next in line and will report its half-yearly earnings on Thursday 4 May, with analysts tipping it will deliver over $3.2 billion in profits.

Next Monday, Westpac is predicted to report a first-half profit of more than $4 billion, followed by CBA the next day, expected to announce third-quarter earnings of over $2.5 billion.

Recent rate hikes across the bank’s mortgage loans are seen as a driver for these earnings.

Over the past 12 months the Big Four have each increased rates on mortgage loans despite the RBA official cash rate remaining on hold at 1.5% since August 2016.

Macquarie Bank reports in the past year the Big Four have repriced mortgages by 14-63 basis points.

The bank's claim these rate hikes are in response to the Australian Prudential Regulation Authority’s (APRA) demands that the Big Four hold more capital in today's risky market.

Through these rate hikes, shareholders enjoyed strong returns over the year. The Australian Financial Review reports investors in the Big Four saw share price returns between 7.5% and 11% this year.

However, as APRA continues to put pressure on the banks to hold more capital, home loan customers are likely to see mortgage rates rise again in the near future.

More to come as the Big Four release their earnings over the next fortnight.

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