Banks continue to face funding cost pressures

Banks continue to face funding cost pressures

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More out of cycle rate movements may be on the horizon, as banks try to recover funding costs.

KPMG head of banking Andrew Dickson said banks are trying to cope with a lot of pressures at the moment, including higher funding costs, which have not been fully recovered as of yet.

“The banks’ biggest challenge is adapting their business model to cope with the competing strains of constrained lending growth, ongoing funding pressure, ever higher regulatory hurdles, and a transition to new mobile delivery channels and competitors,” he said.

Head of financial services at KPMG Michelle Hinchliffe thinks the banks need to look to the future rather than short-term solutions.

“While they are implementing a number of cost reduction measures, the full impacts are yet to flow through to the results.

“They need to make structural, long-term changes that will sustain a lower cost base.

“Bank funding conditions have continued to be tough, and Australia’s banks, while some of the healthiest and best run in the world, will continue to be impacted by the cost of funding.”

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