Pick your bank profit for 2009

The combined net profit of the 54 banks operating in Australia fell by $1.4 billion, or seven per cent, to $17.9 billion over calendar 2009, data published yesterday by the Australian Prudential Regulation Authority show.

In the first full year of financial data since the credit crunch of mid 2007 turned into the financial crisis of late 2008, the total operating income of banks increased $6 billion to $90 billion over the year. Operating expenses increased only $1 billion to $29 billion.

The charge for bad debts increased $2.3 billion to $15.7 billion as they continued to build.

Return on equity for all banks fell to 10.4 per cent in 2009, down from 13.7 per cent in 2008, and to a level a little below what most banks would regard as their cost of capital.

The ROE for the four major banks fell to 11.4 per cent in 2009 from 15.2 per cent the year before. For other domestic banks ROE fell to 7.3 per cent from 8.9 per cent.

Foreign banks trading as subsidiaries in Australia, however, bucked the trend and reported an increase in ROE over 2009 to 9.6 per cent from 8.8 per cent in 2008.

The return on assets, an alternative measure of profit, was steady in 2009 at 0.6 per cent. This ratio applied to all banks, to major banks and to other domestic banks. ROA was 0.7 per cent for foreign subsidiary banks.

APRA's quarterly publication on bank statistics includes next to no data on asset quality.

Provisions actually declined over 2009 for all banks, to $5.9 billion at December 2009, down from $6.4 billion at December 2008 and a quarterly peak of $9.3 billion at June 2009.

An alternative data set (compiled by the APRA but published by the Reserve Bank of Australia) shows combined specific and general provisions for all banks in Australia at the end of 2009 of $21.3 billion, a rise of one third on the year before.

Separate data on asset quality (also published by the RBA) shows impaired assets of $31 billion across the banking sector at December 2009 and equal to 1.18 per cent of banking sector assets. Past due loans were $11 billion.