Australia’s lenders shed roles to improve returns and gain profits
As Australia struggles to bolster its economy towards the end of China’s mining boom, largest the banks across the nation are axing jobs.
According to Bloomberg Australia, Australian banks are toeing the line of global banks that are cutting down on jobs to cope with falling revenue earnings. For the last two years, however, Australia has witnessed increase in employment with a record of huge profits for six consecutive years.
In a bid to save profits and reduce costs in a competitive environment, four of the largest lenders in Australia -- Australia and New Zealand Banking Group, Westpac Banking Corporation, Commonwealth Bank and National Australia Bank -- along with the Macquarie Group have cut down as many as 1,475 jobs. The slashing of jobs has been reported to be on the rise since 2012 when most of them shed above 3,000 staff.
Amid a global economic turndown, banks around the world were forced to cut down production costs and labour to increase the trading revenue. For instance, Credit Suisse Group AG, Deutsche Bank AG and Standard Chartered Plc are cutting down as many as 50,000 roles altogether.
In October, Deutsche Bank announced that it would shed around 15,000 jobs in a new strategy shift to improve returns. Similarly, the CEO of the Credit Suisse Group announced to cut down 2,000 positions in an attempt to cope with pressure from regulators to increase buffers against potential losses.
Last week, Standard Chartered Plc was one of the third banks which announced 17,000 job cuts within a week as faulty loans hurt earnings in the emerging market.
On the contrary, from late 2013, Australian lenders were adding jobs when banks worldwide were involved in shedding them. But in a slowing global economic growth environment coupled with weaker production, they were pushed to join their global counterparts.
“In a period of low credit growth, the focus will be on cost and staff productivity,” David Ellis, a Sydney-based analyst at Morningstar Inc., told Bloomberg, while noting that it is one of the ways through which they can maintain profits.
Due to tightening of regulation and increased global competition, lenders have been hurt in net interest margins, a measure of lending profitability. National Australia’s net interest margin fell to 1.87 per cent (an all-time low) in September over a period of one year whereas ANZ’s dropped to 2.04 per cent.
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