Best bank: Commonwealth Bank of Australia
Commonwealth Bank of Australia (CBA) has solidified its standing as Australia’s best bank, driven not only by robust financial performance but also by its disciplined approach to margin management. Under the stewardship of chief executive Matt Comyn, the bank has strategically opted not to compete for less profitable mortgage customers to focus on delivering sustainable returns.
In the 2023 financial year, CBA outperformed its peers, posting the highest net profit after tax at A$10.2 billion ($6.8 billion), marking 6% year-on-year growth. The bank’s operating income also showed an impressive 13% year-on-year increase. CBA distinguishes itself from its competitors with a more diversified revenue mix, characterized by higher contributions from non-interest income streams. Moreover, the bank’s cost-to-income ratio improved from 45.7% in the previous year to 42.8% in the 2023 financial year, highlighting its enhanced operational efficiency.
Despite the challenges faced by all major Australian banks during the awards period, such as margin compression and slower loan growth, CBA maintained its performance. Although the bank’s net interest margin experienced a six-basis point compression in the first half of the 2024 financial year, settling at 1.99%, it remains among the highest in the industry.
CBA disclosed that its home loan book balance contracted by $2 billion in the most recent six-month reporting period, attributing this decline to its disciplined approach to margin management and its focus on delivering sustainable returns.
Best investment bank: BofA Securities
BofA Securities is Australia’s best investment bank this year, showcasing remarkable growth and leadership in the mergers and acquisitions space. The firm’s impressive performance is reflected in the significant increase in its total deal numbers, which rose from 55 in 2022 to 71 in 2023, and the impressive doubling of its deal value from $19.9 billion to $41.7 billion. Notably, M&A transactions now account for 77% of BofA’s total deal value, up from just 30% last year.
BofA has firmly established itself as a leading M&A adviser in Australia for both announced and completed deals in 2023. The bank’s expertise was evident in the year’s largest transaction in Australia, as it advised Newmont on its acquisition of Newcrest Mining. This landmark deal not only reinforces Newmont’s position as a global leader in the mining industry but also promises to yield significant synergies.
BofA also showed its strength in both the equity and debt capital markets. In the equity space, the bank led several large Australian transactions, such as fully underwriting a substantial A$713 million ($474 million) secondary block trade for Vitol Investment Partnership, the Swiss parent company of Viva Energy. Meanwhile, in the debt capital markets, BofA demonstrated strong diversification across products, significantly expanding its presence in the Australian dollar market and growing its corporate client base.
It has also shown a strong dedication to sustainability-linked transactions, being involved in several significant deals, including Worley’s A$350 million sustainability-linked senior notes and Acciona’s A$625 million sustainability-linked and green-syndicated bank debt facilities.
Best international bank: HSBC
HSBC achieved robust growth in 2023 with net profit growing 26% to total $566 million, with growth coming from its commercial, wealth and personal banking businesses.
The bank relaunched its international offering in line with its International 3.0 proposition in 2023. This incorporates remote digital onboarding for both domestic and international customers and the simplification of cross-border banking transactions. The bank showed strong momentum in onboarding new customers – retail account balances in 2023 grew by $3 billion, a 20% year-on-year increase.
HSBC also worked to improve its digital offering in 2023, introducing its AI Markets feature. This uses purpose-built natural language processing to facilitate interaction using FX analytics, insights from HSBC’s own research and proprietary cross-asset data.
HSBC also played a significant role in sustainable finance in Australia in 2023, with the bank leading Air Trunk’s A$4.76 billion ($3.2 billion) debt deal linked to its carbon, energy and water usage. Additionally, the bank provided A$1.1 billion in debt financing of Neoen’s development and construction for a 1.5-gigawatt portfolio of solar, wind and battery energy storage assets in Australia.
