Banks profiteering despite claims of troubled credit market

Posted by LC Team, Monday, August 4, 2008

Australian banks are profiteering from customers despite claims by the industry that margins are suffering from a troubled credit market, a new report shows.

Mortgage market report, The State of Play, lends weight to claims from the Commonwealth Treasury that profit margins have increased for Australian banks, says report authors InfoChoice.com.au and The Sheet.

“While the recent credit crunch has obviously had a significant impact upon the local money market, there is limited evidence to suggest the costs of funding are still increasing,” InfoChoice head of research Steven Anderson said in a statement.

“The major banks have not only survived but strengthened thanks to the credit crisis, becoming the market price setter for the first time since they relinquished the position to specialist home loan lenders more than a decade ago.”

Mr Anderson said the market share of the big four banks - National Australia Bank, ANZ, Commonwealth Bank of Australia and Westpac - had grown from 59 per cent to 60 per cent since January 2008, and now accounted for more than $578 billion of Australia’s $964 billion mortgage market.

“Unfortunately for consumers, this shift has come at the expense of competition, with smaller regional participants, building societies, credit unions and non-bank lenders losing market share, or being pushed out entirely,” Mr Anderson said.

The State of Play is a quarterly series of reports on the mortgage market in Australia researched and published by InfoChoice.com.au and financial services commentators The Sheet.

AAP

Filed Under: Consumer, Lender News, Uncategorized

5 Comments

MM Reber August 8, 2008

The reason to retain & foster competition in the financial market
as far as possible. It’ll be “back to the future” with the Majors if they can again assume overall control of the market & not long as evidenced here, before they start ever increasingly “lining their pockets” at everybody else’s expense.

bill August 8, 2008

Yes back to the bad old days. No wonder bank profits are up. Decreasing broker commissions by 30-40% and raising customer rates outside of RBA rises. All this while broker bashing and getting rid of the competition.
Which Bank? all of them. The government ASIC etc have a lot to answer for.

rob August 12, 2008

who knew the big banks would be at it again, HUGE profits which have come from cutting the men in the middle (broker commissions and the poor customer)The banks have been blaming the credit crunch for everything. It would be nicve if they actually acknowledged the they need their customers and the brokers that proveide them with these new customers for a change. Bash Bash Bash all the banks know what to do.

rob August 12, 2008

Can someone please tell me why the government won’t step in and tell the banks to pull their heads in for once. It must be so difficult for the CEO’s to be living on their small incomes that they get. The poor broker who supplies these banks with new customers who in turn receive poor customer service then go back to the brokers asking why???

Be good if they took some responsibility for once and stop blaming the “Credit Crunch”

Richard Hicks August 13, 2008

Yeah, you’re all right. But I assure you, the banks are really sufferering at the minute! I mean, as an example, one of the Big 4’s lead deposit / cheque account products is paying 0.01% on balances between $1.00 & $50,000 (paid quarterly) That’s 0.01%. Yep, your reading correctly, 0.01%

That’d pay for 2 coffees (cheap ones) every quarter on $50,000. That’s a great deal; give me some of that…!!!!

One can certainly see how this banks margins are being squeezed here. Times are tough! I know, I know, there are plenty of bank deposit accounts paying a lot better than this, but can you imagine exactly how much cash is sitting in these types of pathetic products at any given time.

If the banks say they offer full banking services with accounts like this, then that’s a bit disingenuous too; as every time a customer asks for anything, they are charged a fee of some description.

In fact, the recent CPI numbers included a marked increase in ‘bank fees’ as a significant component, and as such, pushed CPI higher, which until recently, meant the RBA lifted official rates as a response, which then meant higher mortgage payments & more pressure on the CPI.

Madness!

Gotta love them banks