The pandemic has also reset the way banks deal with customers, by entrenching digital banking across the community.

Asked for the post-COVID-19 trend that’s surprised him most, ANZ boss Shayne Elliott said he was stunned to see downloads of ANZ’s banking app still rising. “That digitisation trend is just developing,” he says. “It’s really accelerating, and it looks like it’s holding.”

Perhaps most importantly, COVID-19 has also reset the economy – quickly and relatively painlessly.

Powering out of the bad debt cycle

Previous bad debt cycles have taken about five years to resolve, but this one took six months. But even better, EY’s banking and capital markets leader for Oceania, Tim Dring, argues low interest rates and resurgent employment have driven strong mortgage growth and early signs of business credit growth.

The level of activity is light years away from what the banks were seeing in pre-COVID 2019.

Elliott says such is the avalanche of applications the banks are dealing with, competition in the market is actually less intense than you might expect.

As the boss of Australia’s biggest business bank, NAB chief Ross McEwan is upbeat. “We’ve got a better pipeline than we’ve seen for years and years and years.”

PwC’s banking and capital markets leader, Sam Garland, says the work the banks have done to simplify their operations in the past few years – stripping out costs, digitising and automating processes, and selling off unwanted business units – means they are well-positioned to take advantage of this post-pandemic environment.

“Our view is that the banks are in as strong a position as they have been for a generation,” he says. “The window of opportunity that is presented here is one for delivery and one for ambition.”

The next challenge: delivering on services

Delivery is about two connected things: ramping up digitisation, which then allows the banks to drive out costs by reducing branches and people.

While Elliott and McEwan gently and indirectly questioned the wisdom of Westpac boss Peter King being so public with his plan to slash costs from $12.7 billion to $8 billion over the next three years, in truth all three banks are working hard to unlock productivity improvements by putting more back-end processes online.

Better processes means faster customer service – but they also ultimately mean less human hands are required.

Quite how each bank delivers on its ambitions is less clear.

One byproduct of the divestments of the banks’ ancillary businesses in recent years is that the big four banks have the same growth engines: mortgages, business banking and, to a greater or lesser extent, institutional banking.

This week’s results suggest the differentiator between the big four is how much focus they can actually give to growth in those areas.

Westpac’s King is still deeply in renovation mode, getting the bank back on track after two years of scandals and operational issues.

NAB’s McEwan is further along on his turnaround, but still working to rebuild the bank’s discipline. However, he does have a strong opportunity to grow volume as business credit rebounds.

ANZ’s Elliott argues his bank is further along the track – divestments complete, 23 per cent less management roles than five years ago – and can now tilt towards growth, particularly around participation in digital ecosystems.

Commonwealth Bank boss Matt Comyn, who will release a March quarter trading update next week, remains the sector’s dominant force, but also has work to do on divestments and costs.

While the banks might be feeling pleased with much of what the Great Pandemic Reset has delivered, there is one big scar it will leave.

As King says, there’s no escaping the fact the sector is still operating in a low interest rate environment – and COVID-19 means that won’t change quickly.

“For banks, uber low interest rates are going to be pretty challenging when they feed through to margin,” he says.

That didn’t happen in the six months to March, but it will. The banks must use this window to prepare by delivering on cost cuts and clever growth.