DESPITE the damage wrought by the global financial crisis, the Commonwealth Bank of Australia has managed to lift its cash earnings by more than 50per cent in six years, from $4.6billion in 2007 to the record $7.1billion announced on Wednesday.
Also this week, the National Australia Bank posted a profit of $1.4billion for the three months to June 30. In 2011, the ‘‘big four’’ banks – the Commonwealth, the NAB, the ANZ and Westpac – recorded after-tax cash earnings of almost $25billion.
Despite such massive profits, bank chiefs continue to talk about rising funding costs and challenging operating environments.
Granted, things remain extremely grim across much of Europe and the United States, but figures compiled by PricewaterhouseCoopers show clearly that the big Australian banks are on solid ground.
Last year’s $25billion in cash profits came from earnings of $74billion. Operating expenses were $33billion, tax came to $9.8billion and bad debts were $5.2billion. Few Australian sectors would have such healthy revenue-to-profit rates.
So strong was the Commonwealth result that chief executive Ian Narev felt compelled to remind people the bank was ‘‘doing well’’ for the ‘‘millions and millions of Australian households’’ who were shareholders, either directly or through their superannuation funds.
Unfortunately, however, there’s been another side to Australian banking, as court cases over the $3.6billion lost by Townsville-based Storm Financial are showing. The Australian Securities and Investments Commission is taking the Commonwealth and other banks to court over their lending to Storm clients, and a separate class action is seeking an estimated $1billion in damages.
Banks may argue that such things could not happen again but calls are mounting for a major review of the Australian financial system. Some 15years have passed since the Wallis inquiry held its investigations into the impacts of deregulation on the Australian financial system.
The GFC showed that endless debt was not the way to run a global economy, and many fear – despite the damage already wrought on economies around the world – that the worst is yet to come. A strong banking system will help Australia withstand whatever the global economic demons can throw at us. But that sector must use its strength fairly, and in the national interest.
THE lack of an after-hours plastic surgeon for trauma or emergency patients at the John Hunter Hospital looks like another case of this region having to make do with less-than-ideal medical services.
Hunter New England Health says patients are transferred out of the region if such work is needed, with other surgeons doing the remaining procedures.
But an admission that plastic surgery funds have been put to other uses appears to indicate that a decision to stop looking for suitable staff was as much about saving money as it was about clinical need.