The questionable sustainability of banking sector profits, including a near universal outlook for lower returns over the medium term, is the chief take away from the close of the banking profit season, which concluded yesterday with Westpac's full year results.Brian Hartzer, Westpac's managing director, yesterday laid emphasis on one theme of the sector's changing dynamics with a reset on the bank's return targets. This has now been defined, for that bank, as being a return on equity in a range from 13 per cent to 14 per cent, down from a prior target of 15 per cent.Three of the Big Four banks reported a fall in net profit, on a statutory basis, including all three of the major banks to report over the last two weeks.The aggregate NPAT for the four major Australian banks was A$28.8 billion over the last year, a decline of $2.6 billion.Cash earnings were less volatile, rising at two banks (CBA and NAB), declining at one (ANZ) and steady at Westpac. In aggregate these were $29.6 billion, a decline of $800 million.The average return on equity was measured by Ernst & Young at 13.8 per cent, a decrease of 1.94 percentage points.These returns are below the major banks' post GFC ROE highs of more than 17 per cent recorded in mid-2015.Margin erosion was only a minor factor, although it was managed unevenly at major banks over the last year. Margins, though, are down markedly over recent years, as shown in the chart.Analysis by KPMG of banks' profits put the decline in margins over the last year at only one basis point, to 202 bps.Sector costs are also proving tough to control. KPMG estimated the average cost to income ratio for the Big Four increased 116 bps to 44.1 per cent.The aggregate bad debt charge also shot up by $1.4 billion to $5.1 billion over the year.