Analysts expect a bumper major bank interim earnings season but warn the headline numbers belie tougher times ahead for investors.
With blood spilling in the mortgage war, as cashbacks and customer retention discounts sap the profitability of writing home loans, Bank of Queensland has stepped back from the battle.released the regional bank’s interim results on Thursday
“We will sit this out,” he said. “We do not want to write business below our cost of capital. Our view is we are not going to participate in an irrational market.”As big banks prepare to report their interim results early next month, the financial impact of acute competitive forces in the mortgage market, triggered by a massive wave of refinancing off fixed-rate loans, will be a key focus, as will the intensifying fight for deposits.
Even though the upcoming bank results will show profits have strengthened, and interest margins have expanded, analysts suggest this may be as good as it gets for lenders facing mounting challenges. This has boosted the earnings on banks’ investments and allowed them to manage NIMs to their advantage, by passing through rate increases to mortgagees faster than they do for savers. Margins are set to expand across the majors by 0.15 percentage points with volume growth of about 7 per cent, says UBS. This would be similar to trends in the United States whereHowever, the second half of 2023 and 2024 are expected to be tougher, as Bank of Queensland’s briefing this week reinforced.
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