The CEOs of the big four banks are raking in a staggering millions in salaries even as Australia’s savings rates are at their lowest in 15 years.
With fewer savings in their accounts, banks must borrow from other banks to lend to home borrowers and benefit from charging interest.
This increases the cost of doing business as banks have to pay other banks when they borrow money from them.
Nonetheless, the banks made record profits, which resulted in CEOs receiving substantial raises and bonuses on top of their already very generous multimillion-dollar salaries.
Commonwealth Bank CEO Matt Comyn received $10.426 million last fiscal year, $3.5 million, or 50 percent more than $7 million in 2021-22.
His bonuses added to his base salary of $2.5 million as the CBA’s cash profit, which covers core operations, rose 6 percent to a record for the year ended June $10.164 billion for Australia’s largest real estate lender.
Mr. Comyn wasn’t the only well-paid CEO, his peers at NAB, Westpac and ANZ took home between $4 million and $6 million.
But they could get even more in 2023 if strong full-year earnings results, due to be released in the coming months, boost their bonuses as rising immigration gives banks more potential home-borrowers.
Commonwealth Bank CEO Matt Comyn received $10.426 million last fiscal year, $3.5 million, or 50 percent more than $7 million in 2021-22
Bank bosses are well paid, although Australian savings rates fell again in the June quarter to just 3.2 percent, the lowest since June 2008 – a time when the Reserve Bank’s interest rate also hit a decade high.
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This was down from 3.6 percent in the March quarter of 2023.
National accounts data from the Australian Bureau of Statistics showed the household saving rate fell for the seventh straight quarter.
As recently as September 2021, household savings – as a share of after-tax income – stood at 19.3 per cent when Sydney and Melbourne were in lockdown.
This was just slightly below the 19.8 per cent figure recorded in June 2020, the highest since June 1974, in the early months of the Covid pandemic, when the border was closed to foreigners and Australians were banned from traveling abroad on holiday.
But 12 rate hikes since May 2022 have seen monthly mortgage payments on an adjustable-rate loan rise cautiously by 63 percent, causing savings rates to plummet.
Australia still had a savings rate of 11.3 percent in March 2022, when the Reserve Bank’s interest rate was still at a record low of 0.1 percent.
The most aggressive pace of monetary tightening since 1989 has seen the federal funds rate rise to an 11-year high of 4.1 percent, prompting borrowers to draw on their savings to service large mortgage payments.
Savings rates fell to their lowest point in mid-2008, during the early stages of the global financial crisis, when cash rates were at a 12-year high of 7.25 percent after six years of rate hikes.
But the banks have also benefited from the high level of immigration during the cost-of-living crisis, thereby gaining more potential customers for housing loans.
Banks have fared well despite Australia falling into a per capita recession in the June quarter for the first time since the Covid-2020 lockdowns, which saw output fall for every Australian.
David Llewellyn-Smith, the chief strategist of MB Super and Nucleus Wealthsaid banks benefited from population growth.
“Typically the winners of this immigration model – even in a per capita recession – are the banks, retailers and developers,” he told Daily Mail Australia.
“Put those three together and you have what’s called the growth lobby and they’re pushing for the model to continue because it’s good for them but not good for the average Australian.”
NAB CEO Ross McEwan was paid $3.89 million in 2022 as bonuses boosted his $2.5 million base salary
Westpac CEO Peter King (right with former chairman Lindsay Maxsted) was paid $3.9 million last year, while Westpac reported $5.7 billion in statutory net income
The Big Four banks are all members of the Business Council of Australia, which works to promote high levels of immigration and lobbies the federal government. Outgoing President Jennifer Westacott makes a public appearance with Prime Minister Anthony Albanese.
The Commonwealth Bank’s 2023 annual report hailed population growth as a financial help.
“Australia’s economy has proved resilient despite the tailwinds of a recovery in population growth, relatively high commodity prices and low unemployment,” it said.
The Commonwealth Bank is the only one of the Big Four in 2023 to report full-year results, but preliminary results suggest all are profitable.
National Australia Bank, the largest corporate lender, reported unaudited statutory profit of $1.75 billion for the three months ended June 2023.
NAB CEO Ross McEwan earned $3.89 million in 2022 as bonuses boosted his $2.5 million base salary, with the bank posting full-year statutory profit of $6.89 billion.
ANZ CEO Shayne Elliott was paid $6 million last year as his base salary increased by $2.5 million through bonuses
Westpac’s third-quarter results showed unaudited net income of $1.8 billion for the three months ended June.
CEO Peter King was paid $3.9 million last year, while Westpac had $5.7 billion in statutory net income.
ANZ posted net income of $3.82 billion for the six months ended March.
The bank’s chief executive officer, Shayne Elliott, was paid $6 million last year as bonuses increased his base salary by $2.5 million and ANZ had full-year cash income of $6.5 billion.
Mr Llewellyn-Smith said the Treasury, which sets economic and immigration policies, wants population growth to generate more tax revenue.
“The federal government has a legitimate interest in the model because a higher population helps to clean up the budget,” he said.
“Individually or per capita, the standard of living is falling, the household is being renovated.”
“You can claim good economic management, even if individual Australians are all regressing.”
The Big Four banks are all members of the Business Council of Australia, which works to promote high levels of immigration and lobbies the federal government. Outgoing President Jennifer Westacott (second from left) makes a public appearance alongside Prime Minister Anthony Albanese (far left) and Commonwealth Bank Chief Matt Comyn (second from right)
Australia’s net overseas migration rate for the year to June hit a record 353,670, the highest ever in a fiscal year, based on permanent and long-term arrivals of skilled migrants and international students.
Population growth of 2 percent is among the highest in the developed world, with only Canada, Singapore and Israel showing higher growth rates.
Despite the per capita recession, Treasurer Jim Chalmers has influenced falling savings rates in his own way.
“Australia’s economy remains stable and resilient despite relentless pressures,” he said.
“Australians continue to restrict discretionary spending to make room for essentials and also to cover mortgage repayments.”