Competition in the Australian Banking Industry

Competition in the Australian Banking Industry
(2006-2012)

Table of Contents

Title Page ---------------------------------------------------------------------- 1
Table of Contents -------------------------------------------------------------2

Executive Summary ----------------------------------------------------------4

1. Introduction-----------------------------------------------------------------5 1.1 Australian Banking Industry 1.1.1 Major Banks / Four Pillars 1.1.2 Regional Banks, Credit Unions & Building Societies 1.1.3 Foreign Banks 1.2 Competition in the Australian Banking Industry

2. Performance Indicators ---------------------------------------------------8 2.1 Market Share 2.2 Three-Bank & Five-Bank Concentration Ratio 2.3 Herfindahl-Hirschman Index (HHI) 2.4 Net Interest Income (NII) & Net Interest Margin (NIM) 2.5 Profitability 2.5.1 Return on Average Assets (ROAA) 2.5.2 Return on Average Equity (ROAE) 3. Conclusion -----------------------------------------------------------------21

4. Bibliography ---------------------------------------------------------------22

5. Appendices -----------------------------------------------------------------24 Appendix I: Proportion of Major Bank Assets to Total Bank Assets Appendix II: Proportion of Other Bank Assets to Total Bank Assets

Appendix III: Net Interest Margin (NIM) Appendix IV: Return on Average Assets (ROAA) Appendix V: Return on Average Equity (ROAE)

Executive Summary

This business report aims to investigate the market share held by the 4 major banks in the Australian banking industry, and the competition that exists within the banking industry.

The data used in this report are mainly taken from several databases including Bankscope, KPMG, APRA, RBA and the prescribed textbook for the subject.
Our stand is that the four major

Bibliography: Australian Bankers’ Association. (2011). History of banks. Retrieved April 10, 2013, from http://www.bankers.asn.au/Banks-of-Australia/History-of-Banks Australian Competition & Consumer Commission Australian Prudential Regulation Authority. (2013). Retrieved April 12, 2013, from http://www.apra.gov.au/ADI/Pages/Default.aspx Reserve Bank of Australia Reserve Bank of Australia. (2013). Statistics, Bank- Assets(B2). Retrieved April 12, 2013, from http://www.rba.gov.au/statistics/by-subject.html Durie, J., & Gluyas, R The Daily Telegraph. (2012). Swan calls out coalition on four pillars. Retrieved April 11, 2013 from http://www.dailytelegraph.com.au/news/breaking-news/swan-calls-out-coalition-on-four-pillars/story-e6freuz0-1226616883821 Investopedia Investopedia. (2012). 5 Bank Concentration Ratio. Retrieved April 12, 2013 from http://www.investopedia.com/terms/c/concentrationratio.asp Investopedia Investopedia. (2012). Net Interest Income. Retrieved April 12, 2013 from http://www.investopedia.com/terms/n/net-interest-income.asp Investopedia Investopedia. (2012). Return on Average Assets. Retrieved April 12, 2013 from http://www.investopedia.com/terms/r/roaa.asp Investopedia Lange, H., Saunders, A., & Cornett, M. M. (2013). Financial institutions management (3rd ed.). North Ryde, NSW: McGraw-Hill News Limited