The Australian Bankers’ Association Thursday reiterated it is important that Australian banks be profitable, because they provide economic security at a time when global conditions are unstable.

Now that the annual reporting period is under way, there’s heightened interest in banks’ results, so the ABA has produced a fact sheet which answers many of the commonly asked questions.

Steven Münchenberg, chief executive of the ABA, said: “A solid and reliable banking system underpins our economy at a time when countries overseas are still dealing with high unemployment, poor business conditions, negative economic outlooks and depressed consumer sentiment. This is the result of the continuing impacts of the global financial crisis.”

“Unlike overseas, banks here did not fail, nor did they require government bailouts. Australia’s healthy banks continue to keep our savings safe and to make loans which keep the Australian economy moving.”

Münchenberg said: “The 'headline' profit numbers of banks appear large because they are very large Australian businesses, yet only two banks feature in the 50 most profitable listed companies in Australia.”

“When viewed against the size of the asset base, bank revenue is relatively low. Bank revenue is only about 5% of total bank assets. Profits represent just 1.3 per cent of bank assets.”

Münchenberg said: “In these uncertain times, it is important for banks to be profitable, so that they have some buffers in place which provide resilience against shocks and a cushion against any downturn in economic circumstances.”

“Critics, who claim banks are too profitable or who call for a reduction in profits, don’t think through the implications of a weakened banking system, nor are they willing to outline what a safe level of profit should be,” he added.