How rising cyber threats are colliding with slowing mortgages in Australian banking

Australia’s biggest lenders have just wrapped up a busy reporting season, and the results tell two stories at once. Profits are holding up and capital buffers remain strong.

But bad-loan charges are climbing, mortgage arrears are at multi-year highs, and the cash rate now sits at an 18-year high of 4.85%.

At the same time, the banking regulator is warning that AI-driven cyber threats and reliance on shared technology providers are becoming major risks to the financial system. Here’s how each of the five biggest players is placed.

Commonwealth Bank of Australia (ASX:CBA)

Commonwealth Bank is Australia’s largest retail mortgage and deposit lender.

For the September 2026 quarter, it reported an unaudited cash profit of approximately $2.8 billion, up 8% on the prior year, with operating income up 3% on the back of lending and deposit growth.

Its CET1 ratio was 11.5% after it paid $4.5 billion in dividends, and customer deposits make up 79% of its total funding.

However, 90-day home loan arrears rose 7 basis points to 0.80%, their highest level in about six years, as higher living costs and interest rates pressure borrowers.

Westpac Banking Corporation (ASX:WBC)

Westpac competes directly with Commonwealth Bank in domestic retail banking.

For the full year ended September 2026, it reported a statutory net profit of $6.8 billion, down 1% on FY25, with profit excluding notable items flat at $7.0 billion.

It declared a fully franked final dividend of 77 cents per share, taking the full-year dividend to 154 cents.

Credit impairment charges more than doubled to $864 million, from $424 million a year earlier.

Westpac’s CET1 ratio was 12.5%, above its 11.25% target.

National Australia Bank (ASX:NAB)

National Australia Bank focuses heavily on business lending alongside its home loan portfolio.

In its full-year results, released on 5 November, it reported a statutory net profit of $6.14 billion, down 9.1% on FY25, while cash earnings fell 13.4% and missed analyst forecasts.

Credit impairment charges rose 85.7% to $1.55 billion, including a $403 million increase in forward-looking collective provisions to reflect slowing economic growth, declining house prices and higher interest rates.

The net interest margin rose 6 basis points to 1.80%, the final dividend was held at 85 cents, and the Group CET1 ratio was 11.87%. NAB shares fell 7.5% on the day of the result.

ANZ Group Holdings (ASX:ANZ)

ANZ operates across Australian retail banking, institutional markets and New Zealand.

For the full year ended September 2026, it reported a statutory profit of $7.27 billion, up 23%, and a cash profit of $7.59 billion, up 31% (or 10% excluding one-off items in FY25).

Total credit impairment charges rose to $582 million, from $441 million, including $222 million in collective provisions.

ANZ’s CET1 ratio was 11.99%, and it declared a final dividend of 83 cents per share, franked at 80%.

Macquarie Group (ASX:MQG)

Macquarie Group pairs global asset management and investment banking with a fast-growing Australian retail bank.

For the half year ended September 2026, it reported a net profit of $2.48 billion, up 50% on the prior corresponding period, and an interim dividend of $3.25 per share.

It was the final result delivered by outgoing CEO Shemara Wikramanayake. On 6 November, APRA announced action against Macquarie after finding it had miscalculated the capital required for its non-bank businesses, breaching its Non-Operating Holding Company authority.

APRA imposed a $100 million governance overlay, on top of an existing $500 million capital overlay applied in 2021, and will oversee a full assessment of how Macquarie calculates that capital.

Macquarie shares fell around 4% on the day.

The Bottom Line

Australian banks enter late 2026 with strong capital buffers and high deposit funding, but rising credit provisions and bad-loan charges show borrowers are under strain.

The Reserve Bank’s Melbourne Cup Day rate hike took the cash rate to an 18-year high of 4.85%, and the major banks are passing it on in full from 13 November.

APRA’s latest warning shifts regulatory attention towards operational, cyber and AI risks, with its 2027 system stress test set to examine AI-driven economic disruption.

For investors, the trade-off is between solid capital returns and rising credit costs, higher compliance spending and tighter regulatory scrutiny.