Finance

The Finance subdivision covers firms providing financial services (excluding insurance and superannuation) in Australia. The most significant industries within the Finance subdivision are building societies, credit unions, domestic banks and foreign banks.

Over the past five years, the Finance division has endured a challenging trading environment, with economic uncertainty continuing to affect the industry. Despite the growth in residential property values, other parts of the economy have lagged behind, leading to the historic lows in the cash rate. The Reserve Bank has been hesitant to raise the cash rate given the two-speed economy of Australia. The consistently falling cash rate over the past five years has contributed to the decline in subdivision revenue, as interest revenue derived from the loan portfolios of lenders has fallen. This has particularly affected operators in the banking industries, which are highly sensitive to movements in the cash rate.

The Finance subdivision exhibits a high level of barriers to entry. Despite the deregulation of the financial system, barriers to entry for the subdivision have remained high overall, but have declined for some segments. Many financial institutions, particularly the large banks, operate across a number of different industries, providing banking, financial advice, portfolio management, superannuation and broking services.

Source of Report – IBIS world (http://www.ibisworld.com.au)