The hidden cost cut shaking Australian banks

ANZ Group Holdings reported a 31% surge in full-year cash profit to $7.59 billion, driven primarily by disciplined cost reductions under its ANZ 2030 strategy.

Major Australian lenders are managing tighter lending margins by cutting operating expenses, with ANZ reducing full-year costs by 14% to $11.07 billion while growing deposits to $815 billion.

Banks face elevated credit provision charges - rising to $582 million at ANZ - alongside complex integration timetables and heightened competition across domestic retail and business portfolios.

Here is how ANZ and its four largest domestic rivals are navigating margin compression, technology overhauls, and shifting profit dynamics across their full-year 2026 results.

ANZ Group Holdings (ASX:ANZ)
ANZ Group Holdings (ASX:ANZ) delivered a statutory profit of $7.27 billion and a cash profit of $7.59 billion for the 2026 financial year.

That cash profit represents a 31% increase over the prior year's $5.79 billion. Operating expenses fell 14% to $11.07 billion, while total credit provision charges rose to $582 million.

Customer deposits rose 9% to $815 billion, and net loans expanded to $861 billion.

Management projects completion of the Suncorp Bank integration by June 2027 and its single retail front-end rollout by September 2027.

Commonwealth Bank of Australia (ASX:CBA)
Commonwealth Bank of Australia (ASX:CBA) is the largest mortgage lender in Australia and the benchmark domestic peer to ANZ.

The bank reported a cash net profit after tax of $10.98 billion (up 7%) for its 2026 financial year ended 30 June 2026, maintaining a Common Equity Tier 1 capital ratio of 12.0% and a deposit funding ratio of 79%.

While ANZ generated earnings momentum through restructuring and corporate integration, Commonwealth Bank focused on digital retail retention and proprietary technology efficiency.

Management noted that intense mortgage competition and rising operating expenses (up 6% to $13.76 billion) remain key near-term headwinds.

National Australia Bank (ASX:NAB)
National Australia Bank (ASX:NAB) remains the primary business lending rival to ANZ across Australasia.

For the 2026 financial year ended 30 September 2026, the lender delivered cash earnings of $6.14 billion ($6,141 million) while holding its final dividend steady at 85 cents per share fully franked - bringing total full-year dividends to $1.70 per share.

Management noted that underlying profit excluding large notable items grew 6.9% alongside higher lending volumes, though intense funding competition and broader cost pressures continue to shape the domestic operating environment.

Westpac Banking Corp (ASX:WBC)
Westpac Banking Corp (ASX:WBC) mirrors ANZ as a major retail and commercial lender undergoing a multi-year structural simplification.

For FY26, the group delivered net profit excluding notable items of $7.0 billion (and a statutory net profit of $6.8 billion), paying a final fully franked dividend of 77 cents per share.

Westpac reported customer deposit growth of 6% to $766.2 billion and total loan book expansion of 5% to $901.3 billion, supported by an 18% surge in institutional lending and a 12% rise in business lending.

Its Common Equity Tier 1 capital ratio closed at 12.5%. Management reported that its multi-year operational overhaul, Project UNITE, is actively simplifying its legacy technology stack, helping reduce operating expenses by 1% over the year.

Macquarie Group (ASX:MQG)
Macquarie Group (ASX:MQG) competes with ANZ across institutional markets, commodities trading, asset finance, and domestic mortgages.

For its 2026 financial year ended 31 March 2026, the diversified financial group posted an annual net profit of $4.85 billion ($4,847 million, up 30% year-on-year), supported by strong performance in its commodities, asset management, and banking divisions.

Its Australian home loan book surged 28% over FY26 to $181.3 billion (and expanded further to $198.2 billion in the half-year to 30 September 2026), capturing 7.6% of the domestic mortgage market directly from traditional retail banks.

Macquarie management stated that market volatility and private market asset valuations remain central variables for short-term transaction revenue.

The Bottom Line
The big four banks and Macquarie Group face a market where loan volume expansion is slowing and deposit repricing is compressing interest margins.

ANZ demonstrated that aggressive cost discipline can offset broader revenue headwinds and lift cash returns in the short term.

However, the sector's long-term valuation gap will depend on executing complex technology integrations, absorbing rising credit provisions, and protecting retail deposit franchises.