The combined net profit after tax of the big four banks – comprising CBA, Westpac, NAB and ANZ – in the first half of 2025 amounted to a whopping $15.5 billion.
This is according to new analysis from KPMG, which revealed that net profits increased a cumulative 3.5 per cent on the first half of 2024 and 4.3 per cent on the second half of FY2023–24.
Cumulative operating income added 4.3 per cent from 1H24 to $46.3 billion, while total net interest income increased 4.8 per cent to $38.6 billion.
Turning to the majors’ average net interest margin (NIM), KPMG said that NIM increased by 2 basis points to 181 basis points against 1H24. However, due to persistent competition, the NIM decreased by 1 basis point when compared with 2H24.
Over 1H25, total operating expenses amounted to $22.7 billion, up 6.2 per cent on 1H24 and 2.9 per cent on 2H24, with costs largely stemming from personnel and technology expenses.
“While overall investment spend increased significantly by 11.8 per cent compared with 1H24, it decreased by 8.9 per cent compared with 2H24, as a result of seasonality in spending within the year depending on each of the majors’ respective investment strategies,” the professional services firm said.
As it related to technology, expenses grew a notable 10.7 per cent over the first half of 2024.
“The majors cited accelerating digital transformation initiatives in response to customer demand for innovative banking solutions and an increased focus on gen AI as key drivers,” KPMG said.
A ‘critical digital juncture’ for the majors
KPMG noted that digital transformation across the big four banks is reshaping the banking landscape, with the interplay between technological innovation, customer-centric strategies, and a focus on security and trust more evident than ever.
“We are at a critical digital juncture,” said KPMG partner, customer and operations, Adrian Chevalier.
“The ability to relentlessly orchestrate multiple, complex, concurrent changes whilst harnessing new technology will increasingly differentiate banks. And customers stand to be the winners,” Chevalier said.
Last financial year, technology spend grew by 15.2 per cent, with Australia’s largest banks continuing to home in on adopting emerging technologies, the likes of AI agents and machine learning.
AI agents in particular are expected to make waves in the banking sector, by enabling more personalised and straightforward customer experiences, while improving operational efficiency.
According to KPMG, the majority (85 per cent) of banking executives globally are already exploring these kinds of solutions.
“These technologies are streamlining operations and reducing costs, allowing banks to offer personalised and convenient services to their customers,” the professional services firm said.
“Emerging technology aside, focus continues to shift towards core platform simplification, modernisation and dealing with legacy technology debt,” it added, citing previous research which saw 58 per cent of executives say that flaws in their foundational enterprise IT systems disrupted business on a weekly basis.
“To fully realise the potential of technology investments, value must remain on the table. This means an ongoing focus on the planning, sequencing and coordination of broader business integration and change across the value chain.”
However, the rapid adoption of AI presents a new challenge, making a strong security posture non-negotiable for the country’s largest banks.
KPMG explained that many chief information security officers (CISO) are seeing flat budgets as parts of their spend are being diverted to AI and automation.
In fact, according to KPMG’s Matt O’Keefe: “Staying on top of the evolving threat landscape, optimising security investment, embracing the efficiency gains of automation, AI and machine learning and streamlining operating models, within an environment of increased downward cost pressure are competing challenges for the banking CISO of today.”
