Now that all four major banks have reported their full year results for the 2011 year, we take the opportunity to refresh our view on their performances and discuss their outlooks.

If you watched the news on TV or read the newspapers, you would think that it was a terrible year to own shares in a bank. However, a look at the fundamentals of Australian banks tells another tale.

The following is a review of the bank results combined with our thoughts on the outlook. We have reviewed our current expectations for growth and dividends to derive our updated valuations.

Key observations…

In the recently ended financial year each major bank reported a record profit attributable to ordinary shareholders. Amazing but true! As a group, the major banks increased their statutory profits by 15.5% in 2011 to $24B and this followed a jump of 51% in 2010 following a tough 2009. Market consensus now suggests that combined major bank profits are expected to increase 6.3% in 2012 and by 6.5% in 2013.

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