Australian people being ripped-off by Westpac, Commonwealth, ANZ, and NAB
The big four banks make an extra $3.7bn in profit from not passing on interest rate cuts
The four major Australian banks, Westpac, Commonwealth, ANZ, and NAB have taken an additional $3.7 billion in profits over the past year as a result of refusing to pass on recent falls in official interest rates given to the Australian people by the Reserve Bank of Australia (RBA) who has put the cash rate at 3%
Westpac, Commonwealth, ANZ, and NAB should be ashamed of themselves as their profit levels are running at around $310 million a month higher than they would have been if the cuts were passed on in full by the RBA.
ANZ yesterday announced it would leave its standard variable rate on hold at 6.4 per cent despite admitting an easing in funding pressures.
Last year the Big Four - ANZ, Commonwealth, NAB, and Westpac increased their cash profits to $25.1 billion, up from $24.1 billion a year earlier.
Australian Institute banking analyst David Richardson said borrowers are being ripped-off and it was time for the banks to lower their lending costs and give homeowner some relief.
"The banks are making enormous profits as the industry is so heavily concentrated making it vital that homeowners shop around for the best deal," he said.
The most recent data from the regulator shows the major banks control almost 85 per cent of the nation's $1.1 trillion mortgage market.
The banks have consistently refused to pass on the full fall in official interest rates since the rate cutting cycle began in November 2011.
Mr Richardson said that based on data from the Australian Prudential Regulation Authority this would have boost CBA's monthly profit by around $100 million. Westpac would have generated close to $93 million a month, NAB $61 million and ANZ around $56 million.
The Reserve Bank last week left the official cash rate on hold at 3 per cent but a number of smaller financial institutions have already lowered their lending rates out-of-cycle.
But ANZ Australia banking chief Phil Chronican said the group's monthly rate meeting yesterday decided not to cut rates out of cycle. Despite admitting there had been "some easing" of new funding costs, Mr Chronican said lending rates were left on hold as net interest margin - profit on lending - had decreased slightly since the start of the year.
Financial analysts said the major banks may be in a position to deliver out-of-cycle rate reduction of between .05 and .1 per cent by mid-year, if the global economic recovery continues. But the timing of any future reductions is unclear as the banks try to balance out the demands of depositors for good returns, shareholders for higher profits and homeowners for lower lending rates.
The Australian Banker Association yesterday slammed the Green Party's proposal for a super profit on banks similar to the mining tax as tax on Australia's retirement savings.
Superannuation funds own large stakes in all the major banks, which paid out around $19 billion in dividends last year.
But Greens Deputy Leader Adam Bandt said the average Australian pays much more in bank fees and charges than they get back through superannuation schemes.
