Finance profits stable since credit shock

Ian Rogers
Finance sector profits are no bigger four years into the financial crisis than they were immediately preceding the worst phase of the shock, in late 2008.
20120905 Finance GDP chart for Banking Day

20120905 Finance GDP chart for Banking Day


National accounts published yesterday by the Australian Bureau of Statistics show that finance sector profits peaked, as a share of gross domestic product, at a shade less than 10 per cent in the June 2008 quarter.

Finance profits as a share of GDP have hovered around the 9.7 per cent level since then. 

Profits of the sector - which include banking, wealth management and insurance - did step up the final year of the boom, in late 2006 and early 2007.

The seemingly steady increase in finance profits as a share of GDP, which dates from the deregulation of the industry in the early 1980s, may, thus, may have paused.

Finance and insurance was one of 10 industry sectors (out of 20) to grow at above trend over the year to June 2012. The ABS put industry growth for the year at 5.0 per cent compared with an average of 3.8 per cent.

Using seasonally adjusted data, finance and insurance was one of six industries to grow above trend over the year.