Operating costs, and in particular payroll, remain a thorn in the banking industry’s side.
APRA’s quarterly ADI statistics demonstrate, once again, the difficulties faced in generating any sort of plausible story around efficiency.
Personnel costs for the four major banks were $27.3 billion over the year to December 2024, representing 61% of total operating costs over the year for these banks.
A ratio that has been rising over recent years.
Technology costs are another major driver of total expenses.
KPMG, in its analysis of the major banks’ half year results said that total headcount has increased by approximately 3.4% compared with the first half of 2024 and by 1.9% compared with the second half of 2024.
Inflationary pressure has further contributed to the rise in labour costs, increasing by 6.2% compared with 1H24 and by 3.5% compared with 2H24, KPMG said.
Technology expenses increased by 10.7% compared with 1H24 and by 3.6% compared with 2H24.
APRA put the combined cost to income ratio of the major banks at 48.9%, up from around 45% a couple of years ago.