Extremely challenging half - even before the crisis
Australia’s four major banks have played a critical role in absorbing the initial shocks of COVID-19 - but tougher tests, which will define the trajectory for the economy and the banking system for the next decade, are still to come.
The half year financial results were not just about the impact of COVID-19. Underlying trends were already difficult for the major banks before the crisis hit - the credit provisions taken, accentuated by ongoing remediation and restructuring costs, have just made tough results much tougher.
At this early stage in the crisis, the environment is one of considerable uncertainty. In this context, three areas are clearly important for future bank performance: credit, capital and the completion of remediation that has been underway for some time. The focus for banks now transitions to laying the foundations for the post COVID-19 economy, with a careful…