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Regional banks less affected by credit crisis than majors

by Staff Reporter7 minute read
The Adviser

The regional banking sector has recorded surprisingly strong results in the face of current market conditions, a KPMG study showed yesterday.

The study showed regional banks’ profits before tax were affected a lot less by the credit crisis than their major counterparts, collectively recording a 4.8 per cent increase in profits compared to a 24.6 per cent decrease for the big four.

Impairment losses also grew at a slower rate of 64 per cent compared to the big banks’ 192 per cent rise, with their “lower exposure to large corporate loans and greater focus on loans with ‘bricks and mortar’ security” serving them well, according to KPMG partner Martin McGrath.

Mr McGrath said despite the strong result the outlook for the sector for 2009 remained challenging.

“In this environment the regionals’ focus will need to be on funding, capital and limiting growth to target only those sectors that are profitable. Cost control will also be a major priority,” Mr McGrath said.

Published: 20-11-08

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