ANZ and National Australia Bank will provide a sharply contrasting picture of depressed profits to their major two counterparts when they unveil combined annual cash earnings this week of about $7 billion, a drop of $1.3 billion over the past year.
In the first significant setback for both institutions for five years, the third- and fourth- placed banks by market capitalisation will both report a fall in net profits after experiencing a different set of financial troubles caused by the global credit crunch.
NAB, which has suffered a $600 million hit caused by its exposure to complex investments in US subprime housing loans - which started the liquidity turmoil more than a year ago - has already disclosed its profit result will be no higher than $3.9 billion.
The bank has brought forward its set of results to tomorrow in an effort to bring some stability to its wildly fluctuating share price, although the decision has been more closely linked by market watchers to its plans to undertake a $2.5 billion-plus capital raising this week.
NAB's earnings figure will be $500 million below last year's result and will confirm that the write-downs it has suffered on various investment portfolios have more than wiped out any extra profit growth it might have expected during the worst financial crisis in living memory.
The 11 per cent fall will be a disappointing end to the reign of NAB's chief executive, John Stewart, who is due to retire on December 31 after nearly five years in charge, a period in which he has rebuilt the bank's reputation and financial standing since the currency trading scandal of 2003-04.
An equally tough challenge has faced his ANZ counterpart, Michael Smith, who will mark his first anniversary as chief executive by reporting an even larger drop in profits in both percentage and numerical terms on Thursday.
The bank's well-publicised problems with two failed broking firms, Opes Prime and Primebroker, and the $1.6 billion it has set aside to cover bad debts in its corporate loan book will mean ANZ's bottom line suffers an $800 million hit.
According to analysts at Credit Suisse, the bank should unveil profits of $3.14 billion on Thursday, compared with last year's result of $3.92 billion.
The profit slide will squeeze Mr Smith's ambitious target to double ANZ's profits by 2012, which he set last December when the bank was headed for an outcome in excess of $4 billion. However, that was before the worst ravages of the credit crisis which has battered many of its international rivals.
But the key to both NAB and ANZ's results will not be what has happened over the past year but what they expect will happen financially in their 2008-09 years as some economists tip a 50-50 chance that Australia will follow other Western countries into recession.
To that end, observers will also be contrasting the performances and outlook comments of the two Melbourne-based banks with that of Westpac, which has leapfrogged over NAB with a market value of $41.6 billion to seize second place among the Big Four.
And that is before Westpac completes its widely heralded $16 billion merger with St George which will enable it to seize the top position from the Commonwealth Bank.
Westpac is expected to produce an annual profit of $3.74 billion, up 7 per cent year-on-year, in 10 days.
That will leave it $1 billion behind the Commonwealth Bank in the earnings league table: its Sydney-based rival reported a $4.73 billion result in August.
