Comment: Major bank profit preview

The annual bank profit show rolls into town today, with National Australia Bank, unusually, taking the stage first for a performance unlikely to satisfy the crowd.

One section (the media) will be ready to bray over the industry's grandiose profit numbers, likely to be rounded to A$30 billion for the four major banks this profit season, while a minority (the investment class) will fret over NAB's low grade return, the industry's compliance cost burden and the thorns of increased capital requirements.

It's a criticism that might as well apply to the whole of National Australia Bank's peers as they take their turn over following days.

The numbers will likely confirm that, far from being the world's "most profitable" - a long-running solecism - investors' returns from Australian banks are not that spectacular and lag behind those of some interesting regional financial services suppliers.

As a starting point, the Bank for International Settlements has recently ranked Australia's banks as the fourth most profitable national group, behind those of China, Russia and Brazil.

In 2013 the BIS put Australian banks' pre-tax profits at 1.28 per cent, a level that's eased closer to 1.2 per cent on the most recent APRA data.

On a net profit basis, their collective ROA hovers around one per cent, as it has in all benign periods for more than a decade.

Compare those numbers with Bank Mandiri in Indonesia, for example, which boasts a return on assets of 2.5 per cent and a return on equity of more than 22 per cent.

Indonesia's largest bank is producing these returns by ramping up lending growth in an economy long past the twin shocks of the Asian and global financial crises. Other banks in Indonesia's banking sector are also not far behind these returns.

Another example is the Pacific bank HFC, which is producing steady - and stellar - returns, with an ROA of around 1.5 per cent in a niche banking market, with a focussed business banking proposition.