They're still raking in billions of dollars in profits but the big four banks are feeling the squeeze amid hot competition for home loan customers.
ANZ was the last of the big four banks to report its annual results, which included an eight per cent drop in cash profit to $6.7 billion in fiscal 2024.
Competition for home loans and deposits, as well as high inflation, had impacted earnings, ANZ CEO Shayne Elliott said on Friday.
Despite price pressure from its fellow big banks and aggressive undercutting by challenger Macquarie, ANZ still managed to increase both its mortgage book and deposits by seven per cent.
The bank's net interest margin, a key metric of loan profitability, declined to 1.57 per cent from 1.7 per cent.
A day earlier, rival NAB revealed a similar slide driven by home lending competition.
In total, the major banks including Commonwealth Bank and Westpac suffered a 5.4 per cent drop in full-year cash earnings from the record high of $32.4 billion the year prior, according to analysis by consulting group PwC.
"Despite financial year 2024 being one of the best results for the majors in recent memory, it also showed how the significant increase in cash rates since 2022 has provided no lasting respite from the extent of competition in Australian banking," PwC banking and capital markets leader Sam Garland said.
The tailwind of rising interest rates has rapidly faded as rising costs and competition moderated returns, with net interest margins across the big four falling by six basis points.
Higher interest rates have also resulted in an increase in ANZ customers requiring hardship support, Mr Elliott said, but the rate of customers more than 90 days in arrears was still below pre-COVID levels.
"Our data shows customers, in general, are holding up better than expected," he said.
"However, we know it's not the case for everyone."
Despite the fall in full-year profit, it was still the bank's second-best performance on record.
The result was impacted by $196 million in one-off acquisition costs for ANZ's purchase of Suncorp Bank, which contributed two months' worth of earnings.
"Suncorp Bank's solid customer acquisition along with growth in home loans and deposits have been particular highlights," Mr Elliott said.
ANZ lowered its total annual dividend to $1.66 a share from $1.75 a year prior.
Saxo Asia Pacific senior sales trader Junvum Kim saw green shoots in the bank's result.
"Although cash profit and revenue declined compared to last year, ANZ's solid growth in home loans and deposits is encouraging," he said.
"Furthermore, if leveraged strategically, the anticipated synergies from the Suncorp Bank acquisition could provide an additional boost in earnings."
Shares in ANZ rose after the result and were one per cent higher at $32.03 mid-afternoon on Friday.
