Banks ‘have to run a lot harder’

Australia's regional banks are facing a challenging year ahead as the First Home Loan Grant is scaled back. A study of seven regional banks by KPMG shows that a very strong home loan market made a big impact on these banks' balance sheets over the past year. The banks included in the study were Adelaide Bank, Bank of Queensland, Bank of Western Australia, Bendigo Bank, Suncorp Metway, St George Bank and HSBC.

KPMG's Peter Nash says that a likely rise in interest rates this year, combined with a shrinking demand for home loans, will result in stronger competition with the Big Four. Mr Nash says that with fewer lending opportunities available for banks over the coming year and those available being highly sought after, the regionals will have to “run a lot harder”.