Bank profits refer to profit after tax for the four major banks. The 2010 result is an estimateproduced by ABA based on reported profits for three of the major banks and an estimate for the othermajor bank. The result shown for 2010 is based on the average growth rates for profits for the fiveyears prior to the GFC.

False – banks making record profitsdue to reduced competition

Sydney, 28 October, 2010:

The Australian Bankers’ Association (ABA) said theclaim that banks are making record profits due to reduced competition is false.The ABA was responding to statements by politicians and others who have madethis claim as the reporting season gets underway for Australian banks.Steven Münchenberg, Chief Executive of the ABA, said: “There is no evidence tosupport this claim. The facts show that the profits of the major banks are nolarger today than they would have been, if there had been no global financialcrisis (GFC).” “If you look at the trend in the banks’ profits before the GFC, it shows that banks’ profits today are in line with that trend.” “Suggestions that major banks are making excessive profits due to a fall incompetition are without foundation.”

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Bank profits ($bn)

Estimate for 2010 basedon average profit growthfor the 5 years prior to the GFC

A solid, healthy and reliable banking system is critical for a stable Australiangrowing economy.Mr Münchenberg said: “The 'headline' profit numbers of banks are always large,that's because they are very large Australian businesses. Four of our top fivebusinesses are banks.”