CHOICE says interest rate response will be a true test of competition in Australian banking; Australia Institute calculate cost of each day’s delay in rate reductions
“The RBA has clearly acted today because they want to stimulate the economy. They have not acted today to try and increase bank profits,” says CHOICE head of campaigns Matt Levey.
“For weeks now we have seen a PR campaign from parts of the banking industry trying to justify slugging consumers with higher borrowing costs, while at the same time not providing depositors with the benefits of higher interest.
“Today we’re saying it’s time for the banks to stop the PR campaign and start passing benefits through to Australian consumers,” Mr Levey says.
CHOICE also says Australians do not need to wait for the major banks to respond to find a more competitive banking deal.
“Despite what many consumers think, there is a whole world of competitive products beyond the big four banks, whether it’s in home loans, savings accounts, transaction accounts or credit cards.
“We are calling on consumers to use CHOICE’s unbiased Compare, Ditch and Switch comparison site and look beyond the big four banks for a better deal.
“By moving to a smaller institution, Australian consumers have the power to create the more competitive banking sector we all want,” Mr Levey says.
CHOICE is inviting consumers to look for a better banking deal using its Compare, Ditch & Switch comparison tool at www.choice.com.au.
Meanwhile the Australia Institue calculates that the Big Four banks earn $12 million per day by delaying any interest rate cut
Every day that the Big Four banks delay passing on the Reserve Bank’s interest rate cut of half a per cent represents a transfer of around $12 million from home buyers with variable loans to the banks, according to The Australia Institute.
An analysis of the ANZ’s new financial report shows that the bank has been crying wolf about cost pressures at the expense of its customers.
While the ANZ has been complaining that their cost of borrowing has been increasing, the Consolidated financial report and dividend announcement, Half year 31 March 2012 shows that their interest expenses are down two per cent.
Senior Research Fellow David Richardson said that with banks not passing on RBA interest rate cuts at the same time as their cost of borrowing is falling, it is easy to see why the ANZ’s profits are on the rise.
The ANZ’s financial accounts show that total deposits are up four per cent and total liabilities are also up one per cent. But interest expenses are down two per cent.
“Where are the costs pressures the ANZ is facing if they can’t be found in their financial accounts? The banks have set a pattern, always complaining about cost pressures only to publish results that show the cost of funds has been low and falling,” said Mr Richardson.
“The banks are engaging in a phoney debate about the cost of borrowing. For the banks it is a very profitable debate.
“The Big Four banks have more than an 80 per cent market share. If they are not prepared to pass on interest rate cuts in full then perhaps it’s time to start discussing a banks super profits tax again,” concluded Mr Richardson.