Lexi Webster
Australia's Big Four banks—the Commonwealth Bank of Australia (CBA), Westpac Banking Corporation (WBC), National Australia Bank (NAB), and Australian and New Zealand Banking Group (ANZ)—are the country's largest banks, dominating the market in terms of market share, revenue, and total assets. Together, they hold more than 80% of all loans from mortgage borrowers, with Commonwealth Bank consistently reporting the largest total assets among the four. The Big Four banks also have the most extensive network of ATMs and physical bank branches in Australia, with Westpac, for example, operating 997 branches across the country.
| Characteristics | Values |
|---|---|
| Names | Commonwealth Bank, Westpac, NAB, ANZ |
| Alternative names | CommBank (CBA), Westpac Banking Corporation (WBC), National Australia Bank, Australian & New Zealand Banking Group |
| Profitability | Very high |
| Market share | Dominant |
| Customer satisfaction | High |
| Number of bank branches | Extensive network |
| Number of ATMs | Extensive network |
| Number of call centres | Extensive network |
| Total assets | High |
| Total resident assets | Large bulk of $5.5 trillion |
| Total loans | More than 80% of all loans from mortgage borrowers |
| Total deposits | High |
| Regulatory authority | Australian Prudential Regulation Authority (APRA) |
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What You'll Learn
The 'Big Four' Australian banks
The "Big Four Banks" in Australia are the four largest banks that have historically dominated the country's banking industry in terms of market share, revenue, and total assets. They are:
Commonwealth Bank (CBA)
Commonly abbreviated to CommBank, the Commonwealth Bank is part of the "Big Four Banks" in Australia. The bank reported a $5.2 billion half-year result in 2023. It is also due to provide a trading update. Commonwealth Bank's total assets have been consistently high over the past decade and were the largest among the big four in 2024.
Westpac Banking Corporation (WBC)
Westpac is another one of Australia's "Big Four Banks". It has 997 bank branches across the country. In August 2024, Westpac joined the $400 billion club. During the Global Recession of 2008-09, Westpac acquired St George Bank, reinforcing its special status as one of the "Big Four".
National Australia Bank (NAB)
The National Australia Bank is the third-largest of the "Big Four Banks" in Australia. It is forecast to deliver $11 billion in cash profit for the six-month period to March 2023. The bank also dominates the banking sector in New Zealand through its subsidiary, Bank of New Zealand (BNZ).
Australian & New Zealand Banking Group (ANZ)
ANZ is the smallest of the "Big Four Banks" in Australia. It also has a subsidiary in New Zealand, ANZ Bank New Zealand, which is the largest of the Big Banks in New Zealand, making a profit of NZ$1.37 billion in the 2012/2013 financial year.
Together, these four banks hold $800 billion more than their five closest competitors combined. They have the most extensive network of ATMs and physical bank branches in Australia.
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The four pillars policy
In 2018, the Productivity Commission released a report warning that the four pillars policy was outdated in the digital world and could allow poor management practices to go undetected. The report recommended that a regulator like the Australian Competition and Consumer Commission (ACCC) would be better placed to improve competition in the financial system.
Despite criticism and changing market conditions, the four pillars policy has enjoyed bipartisan support from the Australian political mainstream since its establishment. The policy's intent is to maintain the separation of the four major banks and prevent the potential issues that could arise from further consolidation in the industry.
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The banks' high profitability
The "Big Four Banks" in Australia refers to the four largest banks that have historically dominated the country's banking industry in terms of market share, revenue, and total assets. These banks are Commonwealth Bank, Westpac, NAB (National Australia Bank), and ANZ (Australia and New Zealand Banking Group). Together, they make up around 80% of the nation's financial system and have long been investor favourites due to their strong profitability and hefty dividends.
The Big Four banks in Australia have consistently generated high profits over the years. In FY2023, they delivered a record full-year profit of nearly $32.5 billion, with the Commonwealth Bank accounting for the largest share at $10.2 billion, followed by NAB at $7.7 billion, ANZ at $7.4 billion, and Westpac at $7.2 billion. This marked a 12.4% improvement compared to the previous financial year. The strong profit figures have been attributed to increasing margins on loans as the Reserve Bank lifted interest rates.
The high profitability of the Big Four banks can be attributed to several factors. One key factor is their dominant market position, which has been maintained through policies such as the four pillars policy. This lack of competition allows them to charge higher fees and interest rates, increasing their profit margins. Additionally, the Big Four have the most extensive network of ATMs and physical bank branches in Australia, making them more accessible to customers and driving more business their way.
Another factor contributing to their profitability is the high interest rates in the country. During periods of rising interest rates, the Big Four banks can charge borrowers more for loans, resulting in increased profitability. For example, in 2023, the rapid-fire rises in the official cash rate created a highly profitable period for these banks, with a combined six-month profit forecast of $16.2 billion.
While some analysts suggest that the peak profitability of the Big Four may be passing, it is important to note that they are still expected to maintain strong earnings. Their financial stability is often linked to the overall economic health of the country, as Kevin Davis, emeritus professor at the University of Melbourne, noted that as long as most people have jobs, banks will continue to print strong profits.
In summary, the Big Four banks in Australia have maintained their high profitability through their dominant market position, extensive branch and ATM networks, and the ability to capitalise on rising interest rates. While there may be a shift in the landscape, these banks are expected to remain highly profitable in the foreseeable future.
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Regulation and safety of Australian banks
Australia's banking sector is dominated by the "Big Four" banks, which have historically led the industry in market share, revenue, and total assets. These banks are the National Australia Bank (NAB), ANZ, Commonwealth Bank, and Westpac.
While the Australian government determines the broad framework for regulating banking and financial services, several agencies are responsible for oversight and supervision. These include the Australian Prudential Regulation Authority (APRA), which requires all banks to maintain a buffer of capital to meet unexpected customer withdrawals, and the Australian Securities and Investments Commission (ASIC), which oversees disclosure and market conduct, licenses financial services providers, supervises real-time trading, and enforces laws against market misconduct.
ASIC also works closely with other government agencies, including the Australian Taxation Office, the Reserve Bank of Australia (RBA), and the Australian Competition and Consumer Commission (ACCC). The RBA is responsible for the overall stability of the financial system, monetary policy, and payment systems, while the ACCC enforces competition policy and consumer protection across the economy, including in the banking sector.
Additionally, AUSTRAC regulates anti-money laundering and counter-terrorism financing (AML/CTF) efforts and serves as the country's financial intelligence unit, combating tax evasion, money laundering, terrorism, and organised crime.
All Australian banks are considered relatively safe for consumers. Money in savings accounts is protected by the Financial Claims Scheme, which safeguards up to $250,000 per authorised deposit-taking institution (ADI), including big banks, small banks, and credit unions.
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The banks' extensive networks
The "Big Four" banks in Australia are the Commonwealth Bank, Westpac, NAB (National Australia Bank), and ANZ (Australia and New Zealand Banking Group). These banks have historically dominated the country's banking industry in terms of market share, revenue, and total assets. Together, they hold $800 billion more than their five closest competitors combined.
The Big Four banks have the most extensive network of ATMs and physical bank branches in Australia. For example, Westpac has 997 bank branches across the country. Major bank call centres typically operate for longer hours, often from 8 am to 8 pm, and may offer 24/7 customer service for financial emergencies or overseas assistance.
The Big Four banks also have a strong presence in New Zealand, where they dominate the banking sector through subsidiaries. ANZ Bank New Zealand, a subsidiary of ANZ, is the largest of the Big Banks in New Zealand, making a profit of NZ$1.37 billion in the 2012/2013 financial year. The other subsidiaries include ASB Bank, formerly Auckland Savings Bank, a subsidiary of the Commonwealth Bank of Australia; Bank of New Zealand (BNZ), a subsidiary of NAB; and Kiwibank, the state-owned bank, which is the fifth-largest bank in New Zealand by profit.
The Big Four banks in Australia are highly profitable and well-capitalized, and they are regulated by the Australian Prudential Regulation Authority (APRA). APRA requires all banks to maintain a buffer of capital to meet unexpected customer withdrawals. The biggest banks are subject to stronger capital requirements than smaller banks.
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Frequently asked questions
The "Big Four" banks in Australia are the Commonwealth Bank of Australia (CBA), Westpac Banking Corporation (WBC), National Australia Bank (NAB), and Australian & New Zealand Banking Group (ANZ).
The "Big Four" banks are the four largest banks in Australia, dominating the market in terms of market share, revenue, and total assets. They hold more than 80% of all loans from mortgage borrowers.
All Australian banks are relatively safe. If you bank with any authorised deposit-taking institution (ADI), which includes the "Big Four", your money in savings accounts is protected by the Financial Claims Scheme. This scheme protects up to $250,000 of your savings, per ADI, per account holder, if the institution collapses.
