Australia’s major banks have continued to generate billions in profit even as sweeping job cuts reshape the sector, raising sharper questions about how cost pressures are being managed.
A KPMG analysis has shown Australia’s big four major banks delivered a combined $15.2 billion in profit after tax in the first half of 2026, down just 2.1 per cent, while operating income climbed to $48.5 billion.
That resilience has been underpinned by steady lending growth and stable margins, with net interest income rising 4.9 per cent to $40.5 billion and net interest margins holding at 178 basis points.
At the same time, cost pressures have intensified, with the average cost-to-income ratio rising to 52.1 per cent as inflation pushed up core expenses, particularly staffing.
Reported figures show Australia’s big four banks cut close to 7,900 jobs in 2025 alone, including roughly 3,500 roles at ANZ, around 1,500 at Westpac, more than 400 at NAB and about 164 at Commonwealth Bank.
Those reductions have continued into 2026, with further rounds of cuts emerging across the sector. Commonwealth Bank has moved to cut another 119 roles in recent months, following earlier redundancies and automation-driven changes, and is also set to deepen its relationship with AI company Anthropic.
NAB has also announced additional restructuring, eliminating around 447 roles in one program alone, while shifting some positions offshore.
ANZ’s overhaul remains the most aggressive, with plans to remove up to 4,500 roles as part of a broader simplification drive, alongside thousands already cut as the bank pursues cost savings and productivity gains.
Even where banks have framed these changes as efficiency measures, the scale and persistence of the cuts point to a deeper structural shift tied to automation, digital transformation and margin pressure.
Investment spending rose 4.7 per cent over the half, with technology costs surging, including a 32.6 per cent increase in technology expenses to $6.3 billion, reinforcing the sector’s pivot toward AI and digital platforms.
Brad Daffy, powered data & AI partner at KPMG Australia, said: “As banks seek access to AI talent with practical experience, those who jumped in and learned the skills quite early have become very valuable in the market, with productivity benefits expected to be realised in future periods.”
The combination of rising tech investment and workforce reductions has created a stark contrast between sustained profitability and the human cost of maintaining it, particularly as dividends continue to rise.
Average dividends per share increased 2.3 per cent over the half, underscoring that shareholder returns have remained intact despite the softer earnings result.
David Heathcote, KPMG Australia’s head of banking & capital markets, said: “While the headline results remain resilient, the majors are positioning for a more challenging period ahead. The focus is increasingly on strengthening balance sheets and staying close to customers as inflation and interest rate pressures continue to work through the economy.”
He added: “The half-year results reinforce the strength of the sector, but also signal a shift toward an unfavourable outlook. The sector is balancing growth and returns while navigating a more complex environment shaped by a slowing economy, together with the threat of further interest rate rises and evolving geopolitical risks impacting both consumer and business confidence.”
