Today’s Sydney Morning Herald reveals that banks, using the Global Financial Crisis as an excuse, have increased the costs to consumers above their increase in costs, resulting in the windfall evident in the recent bumper round of profit announcements.
The Herald’s analysis was based on the Reserve Bank’s most recent quarterly bulletin which showed how the big four banks had faced a 1.3 to 1.4 per cent increase in their funding costs, but increases in costs faced by banks was more than offset by interest rate increases for their customers.
For example:
- A borrower with a three-year fixed-rate home loan of $300,000 pays a personal contribution to extra bank profit of between $75 and $125
- A borrower with a $30,000 personal loan is paying $50 a month of their loan bill as their contribution to extra bank profit.
- A business borrower with a $1 million overdraft is paying $500 to $583 a month as their contribution to extra bank profit.
All that extra profit does add up, with the big four announcing a combined half year profit of 14 billion dollars, well above pre-GFC profit levels.
This latest data provides further evidence to support our call for further regulation of banks, in particular the need to require banks to only adjust interest rates in line with Reserve Bank movements. Our Better Banking Survey results show 80% of customers and workers want this regulatory reform.
While the fact that banks are using the GFC to gouge customers is really no surprise to the average bank customer, the Reserve Bank’s own figures confirming it as fact rather than a feeling is damning. Government must act in the interest of all Australians to better regulate banks and protect customers from being ripped off.
Rod Masson, FSU National Policy Director
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Lorae Day
