Australian banks sound – KPMG

Australian banks may have suffered their first decline in profits in 15 years, but they are weathering the global markets meltdown comparatively well, according to the latest analysis issued by KPMG.

The analysis, based on a KPMG survey, revealed that for the first time since 1992 the Australian major banks had reported a decline in profits, but according to KPMG’s head of banking practice, Andrew Dickinson, they have performed much better than their overseas counterparts.

“The majors’ results reflect the resilience of the Australian banking sector, where we are not seeing the same level of carnage É as in the UK, Europe and the USA,” Dickinson said.

“Governments overseas have had to inject huge amounts of capital into the banks to keep them solvent. That has not been the case in Australia, where the banks are stronger.”

Looking at the broad results for the Australian banking sector, the KPMG analysis said the banks had been impacted by a near trebling in credit impairment charges to $6.8 billion compared to $2.4 billion in 2007.

It said this had been driven principally by provisions against a small number of large, individual corporates and prudent increases in economic overlays included in collective provisions.

The analysis said, however, that there were no major systemic issues and asset quality remained sound.

It said the outlook for Australian banks was cautiously optimistic, with the Federal Government’s offshore funding guarantee and deposit guarantee offering a measure of security in volatile times.