Australia's big four banks have posted their first collective fall in cash earnings since the global financial crisis rocked the world economy in 2008-09.

Analysis from two major accounting firms - PwC and KPMG - of the major banks' results for financial year 2015-16 show the bank's preferred measure of cash earnings slipped 2.6 per cent to $29.8 billion.

It is a far cry from the banks' unbroken run of cash earnings growth between 2009 and 2015, when profits expanded from $17 to $30.6 billion.

The result would have been far worse had the audited, statutory measure of net profit after tax been used, with the big four booking $22.7 billion in earnings using the internationally accepted accounting rules.

That is more than a quarter down on last year's $30.9 billion in combined statutory net profits.

NAB was the big culprit in that department, with the loss-making sales of its UK banking business and its life insurance division the main factors.

However, ANZ and Westpac also posted falls in their statutory results.

Banks' interest margins - the profitable gap between what rate they pay for money and what they lend it at - have been under pressure. ( Supplied: KPMG )

PwC's banking leader Colin Heath said there was a number of factors behind the weaker results, which points towards further difficulty in generating profit growth.

"We've seen rising bad debt expense, some sustained pressure on margin and, more recently, signs of weaker credit growth in amongst some heavy political and community scrutiny," Mr Heath noted, in light of the banks being forced to front Federal Parliament last month.

"Viewed in isolation, these are solid results. However, when you look at the challenges ahead, it's clear the majors are going to need to push very hard in the future to maintain their current level of performance."

Selling assets, losing out from rising bad debts

One of the moves common across the major banks has been to sell or exit businesses that are underperforming or not seen as a "core" or growth area.

"It is inevitable that the majors will continue to refine their business models, being much more selective on which markets, products and customer segments to serve and they may seek to pursue with a different approach - or exit altogether," said KPMG's national head of banking Ian Pollari.

After the end of the 2015-16 financial year, ANZ announced the sale of its retail banking and wealth operations in five Asian countries to Singaporean bank DBS.

Another key challenge facing the major banks is a rise in bad and doubtful debts - particularly worrying at a time when interest rates are at record lows and economic growth near to average levels.

Bad and doubtful debts for the big for collectively rose 39 per cent to $5.1 billion, the highest since 2012.

The banks have attributed most of the rise to the resources bust and a few large corporate loans that have gone, or are likely to go, sour.

"Whilst it appears for now that these losses are isolated to sectors and regions impacted by low commodity prices and the decline in the mining and resources sector, there are signs that bad debt expense may have been as good as it gets," said PwC's Mr Heath.

Bank profits are falling, with bad debt provisions on the rise. ( Supplied: KPMG )

The banks profited from reducing those bad debt provisions over the past few years, so it is no surprise that they are now losing out having taken all the benefit in previous years.

The next financial year does not look to have started any better, with CBA posting a flat first quarter profit of $2.4 billion in its latest trading update.