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Banks reap profits from extra margins
12 March 2010 |
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| Increases in major bank lending rates have more than fully offset the significant increase in their funding costs since mid 2007, according to the Reserve Bank of Australia.A paper on bank funding costs and lending rates, prepared by four members of the RBA’s domestic markets department and released yesterday, reports that bank funding costs are “significantly higher relative to the cash rate” than they were in mid 2007 due to the increase in the cost of deposits and a shift in the banks’ funding mix to more stable (and more expensive) types of funding – deposits and long-term wholesale debt.The RBA estimates that the average cost of the major banks’ funding is about 130 to 140 basis points higher relative to the cash rate than it was in mid 2007. The report says the major banks’ average interest rate on outstanding household and business loans is around 160 to 165 points higher, relative to the cash rate, than it was in mid 2007. It says: “Most of the increase in lending rates over the cash rate has been due to higher funding costs.For the major banks, however, there has also been some widening in their lending margins.” The RBA says net interest margins are 20 to 25 basis points higher than pre-crisis levels. This analysis is at odds with statements made by bank chiefs at recent presentations. When CBA chief executive Ralph Norris presented the bank’s December half results he said the bank faced continuing funding cost pressure and that “the pressure is not going to diminish any time soon.” And when Westpac chief executive Gail Kelly delivered a December quarter update she said the bank still had additional funding costs that it wanted to pass through. |
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| Source : Banking Day |
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| 31 March 2010 | - Young people not coping with debt |
| | - Banks profiting from card debts |
| | - RBA says banks face more competition |
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| 30 March 2010 | - Can you handle higher rates? |
| | - Our banks never in doubt says RBA |
| | - Term Deposit rates may have peaked |
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| 29 March 2010 | - CUA says customer service stacks up |
| | - Rates are going up again |
| | - 1000 Auction weekend in Melbourne |
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| 26 March 2010 | - First home owners are doing fine, thank you |
| | - Mortgage stress is not rising |
| | - Deposit rates at record highs |
| | - Rates to go up at least 0.5% |
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| 25 March 2010 | - Westpac says get used to rate rises |
| | - Big banks still rule lending |
| | - Govt considers cutting deposit tax |
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| 24 March 2010 | - CUA cuts mortgage rates |
| | - Buying a house can be risky behaviour |
| | - Westpac to pocket huge $$ from card charges |
| | - GFC not over yet says ANZ |
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| 23 March 2010 | - Savings accounts feature bonus rates |
| | - Banks say rates are going up |
| | - Westpac credit cards charge interest on interest |
| | - Credit card surcharging under fire |
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| 22 March 2010 | - AMP cuts variable mortgage rate |
| | - Sydney auction clearance rates continue to improve |
| | - No deposit home loans get thumbs down |
| | - Mortgage rates go up |
| | - Investors reject NAB bid for Axa |
| | - Eftpos cheaper than ATMs for Cash out |
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| 19 March 2010 | - UBank heading for mobile phones |
| | - St George giving away business training |
| | - Jump in new housing starts |
| | - Competition not yet back in banking |
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| 18 March 2010 | - Home price timebomb is ticking |
| | - Competition returning to mortgages says RBA |
| | - New lenders undercut the big four |
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| 17 March 2010 | - ASIC warns on Term Deposits |
| | - Direct debits can hurt the indebted |
| | - Most can’t understand credit card statements |
| | - Shoppers choosing debit over credit |
| | - Credit card tricks and traps |
| | - Banks make big promises to do better |
| | - RBA says Aussie banks are strong |
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| 16 March 2010 | - Banks lower some term deposit rates |
| | - Savers willing to move for better rates |
| | - Aussies don’t know about deposit guarantee |
| | - Westpac to launch new online bank |
| | - Rudd says banks are gouging profits |
| | - New home finance numbers plummet |
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| 15 March 2010 | - Best performing property markets over 10y |
| | - Affordable suburbs recording strong price growth |
| | - ANZ internet banking helps E*Trade |
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| 12 March 2010 | - Mortgage stress hits first home buyers |
| | - Average mortgage up 40 per cent |
| | - Rates to go up another two per cent |
| | - Term deposit rates at historical highs |
| | - Investors like ANZ |
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| 11 March 2010 | - High interest rates spook buyers |
| | - Big banks still dominating market |
| | - ING targets internet mortgages |
| | - ING growing as a mortgage lender |
| | - Now is a good time to pay off debt |
| | - Banks take more on credit card rates |
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| 10 March 2010 | - ANZ team to fix mortgage problems |
| | - Brokers offer cash back on mortgage commissions |
| | - Insurers dealing with 40,000 claims |
| | - Bank of Queensland builds war chest |
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| 09 March 2010 | - CBA lowers LVRs for investors |
| | - Property getting unaffordable again |
| | - First home buyers giving up |
| | - NAB, ANZ hindered by back office delays |
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| 08 March 2010 | - Auctions results dip down |
| | - Aussies like debt again |
| | - Interest free deals not so free |
| | - Interest free deals not so free |
| | - Aussies choose weekends over cash |
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| 05 March 2010 | - Brace for 2 years of rate rises |
| | - Rate rises hit credit cards |
| | - ATM fee reforms a failure |
| | - ANZ, CBA go to India |
| | - Westpac goes to London |
| | - CBA to join Facebook, Twitter |
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| 04 March 2010 | - Westpac and NAB hike rates by 0.25% |
| | - How high will rates go? |
| | - Sydney needs more house sellers |
| | - St George customers get wrong statements |
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| 03 March 2010 | - CBA, ANZ, St George move up by 0.25% |
| | - All eyes on mortgage rates |
| | - Rate rise appropriate says RBA |
| | - Swan warns banks on rate rises |
| | - 1 in 5 chance of April rate rise |
| | - More travellers choosing HSBC account |
| | - SENSE account helps with saving |
| | - Police advise: open a bank account |
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| 02 March 2010 | - RBA lifts rates by 0.25 |
| | - ASIC warns of dual pricing on term deposits |
| | - Term deposits not set and forget |
| | - ING aiming for growth in loans |
| | - Charged thousands for own money |
| | - Investors, upgraders drive new home sales |
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| 01 March 2010 | - BoQ leads on personal service |
| | - Westpac has fastest mortgage turnaround times |
| | - NAB buckles under mortgage overload |
| | - Borrowers reject fixed rate mortgages |
| | - Auction results improving for vendors |
| | - Aussies owe more than ever |
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