Australia's Big 4 Banks .... Are you still sure you can still name them?

I’d like to put an argument to the group that Westpac is not part of the big 4 any more replaced with Macquarie and ANZ is the next target insight for the new boys on the block.

This site measures by market Cap on Live Data (Click the link if you want the data) and its just banks world wide of which JP Morgan is the largest. Its in USD and its measure is Market Capitalisation … And its lIve data so this is the position as I wrote this post.

Of the Australian’s in the top 100 there are only 5. Not surprising 21 are US Banks, 12 are Chinese, India and Canada have 6 each and Australia shares 5 with Brazil, UK and Japan. Of the rest Taiwan has 4 there are 5 countries with 3 banks, 3 with 2 and 9 with the sole entry. In the top 10; 5 are USA, 4 are Chinese and Canada scrapes in with its first at #10.

For the Aussies:

  1. CBA ranks at 1 with $120.63B in the world list its #16
  2. NAB ranks at 2 with $70.76B in the world list its #32
  3. ANZ ranks at 3 with $56.32B in the world list its #41
  4. MQG ranks at 4 with $52.54B in the world list its $45
  5. WBC ranks at 5 with $50.04B in the world list its #47

It’s about the most up to date source I’ve found

In August 2021 ADV Ratings told a different story with Westpac at 2 and Macquarie at 5. As they say “That was then - This is now!”

What’s interesting is the data Marketwatch gives which is Revenue per Employee - this will be in AUD

  1. Macquarie $906.56K
  2. Westpac $668.36K
  3. CBA $656.11K
  4. NAB $630.59K
  5. ANZ $608.36K

The traditional 4 majors have a gap between them and Macquarie and its showing. Westpac announced in March 2021 it was closing 48 Branches which may tend to inflate their revenue per employee figures - I’m not expecting them to be that efficient …

IMHO it won’t be long before Macquarie catches and passes ANZ to claim 3rd out right… You only have to see Macquarie going after the traditional Mortgages in advertising and ANZ have at least recognised their problem as they try to address their paperwork with a massive IT project - but is it too late to save 3rd spot? (I think so)

So is there a new kid on the block and its short term - services will resume shortly? (Prob No. Macquarie look settled and ready to take its place in the big 4) Is Westpac in danger of being relegated to Division 2? (Prob not. The next biggest in Australia is Suncorp, Its less than a quarter the size of Westpac).

The hiccup everyone is waiting for is seeing how the banks manage interest rates and the likely bad debts that will follow rate rises. I’m not sure there will be too much bad news for the bigger banks … In general as Interest rates rise the margin the bank makes spreads (that is they tend to make more money not less). Their only issue is if they have lent to the wrong people in the first place (bad debts) and the people who tend to do that and end up in trouble are in the smaller banking entities. If you can remember (or look up your history) that is when the last round of “arranged marriages” occurred. Look at or google Tricontinental, Pyramid Building Society, Commercial Banking Company of Sydney, Commercial Bank of Australia, State Savings Bank of Victoria just a few of names from the past.

Disclosure: I or the family are shareholders in ANZ, NAB, Macquarie, CBA, JP Morgan, Westpac. Often we hold some shares longer than we would like because of the tax outcome.

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Brilliant post, Mike. Thanks for putting this together! A different 4 banks face the next era of interest rate action from the 4 that faced rising rates last time around.

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